New Partnership Offers ESG Risk Data to Guide Lenders

Verisk Analytics is partnering with RiskSpan to offer mortgage providers insight into climate risk. ESG data is moving beyond the support of financial investing, corporate screening, and property and casualty insurance and into consumer lending.

An Analyst’s Opinion:  What to Know and Why It Matters

RiskSpan and Verisk Analytics are collaborating to offer a first-of-its-kind intelligence platform to the housing finance industry that offers location-based climate risk data. Mortgage providers and refinancers can now take into consideration financial risk when extending loans to property owners in certain locations.

The partnership will combine Verisk Extreme Event Solution’s property modeling with RiskSpan’s Edge Platform’s mortgage analytics to support location-based climate risk assessments. The target audiences for the combined platforms are mortgage providers and refinancers as well as commercial property lenders. The resulting insight is a property-specific hazard risk metric.

Trends that support this partnership include the increase in global natural disasters as a result of climate change. Flood lines have shifted significantly in recent years for properties along coasts as property damage has risen as a result of extreme weather. According to Verisk, 62 million residential locations are at moderate to extreme risk of flooding alone. The risk to the housing finance industry from natural disasters remains significant.

Analyst Rating: Positive

Outsell assigns a positive rating to Verisk Analytics for two reasons. First, the provider’s natural catastrophe and climate solutions are already leveraged by leading insurance, reinsurance, corporate, and government entities to assess risk. Second, Verisk deploys a ground-up approach to property-specific risk analysis, which aligns with banks’ current loan-level approaches to mortgage credit and prepayment modeling methods.

Author:  Will Jan 

VP & Lead Analyst, Outsell, Inc.

Will Jan covers Outsell’s research program in the credit, financial, governance, risk & compliance (GRC), and tax & accounting segments. His research includes competitive analysis, innovations (fintech, insurtech, regtech, and risktech), and disruptions in these areas to aid in opportunity-discovery.

To read the full report contact Outsell Inc., a cofounder of BIIA  

 

Also read:  Verisk – RiskSpan Collaboration