Assessing the widespread exposure and varying characteristics of coastal, fluvial and pluvial flooding is imperative for financial institutions to understand and manage the potential financial impacts of different flood types. 

Climate stress-testing models like MSCI Climate VaR may be complex, but their main mechanisms can be explained using linear regression. This helps transform input variables into risk outputs, making it easier for investors to understand the primary drivers.  

As TCFD reporting grows more sophisticated, investors may be able to use climate data to make meaningful disclosures across their firms. We explore three key topics: choice of metrics, internal consistency and cross-functional applications.