While climate risks are a pressing threat to United States commercial real estate markets, there are various climate-modeling software tools used for analyzing risks. These tools can be effective for baseline physical risks but can often fall short when assessing material physical risks from climate change. In a report by MetLife Investment Management, Pitfalls & Mitigants of Climate Assessment Software, various risk assessments are explored to further understand how to mitigate the shortfalls in software tools.
There are two categories of physical climate risk hazards: acute and chronic. The risks within the real estate industry must be assessed through different models and data sources. Early physical risks were assessed by property insurers to determine protection against catastrophic risk from extreme weather events, according to the report. Here, event-based modeling was completed, including an analysis of historical events such as flood maps and weather pat
