The Physical Climate Risk Assessment Methodology (PCRAM)
Infrastructure systems must become resilient against climate change if they are to be sustainable.
Owners, operators and investors need to have confidence that infrastructure can withstand and recover from the extreme weather that is becoming increasingly frequent, in a way that minimises disruption and repair costs and protects its performance. Users need to know that they can rely on the vital services these systems provide.
Click here to view PCRAM’s guidance document.
Organisations that fail to protect themselves, their customers and society from harm resulting from climate impacts are exposed to a rising level of financial and reputational risk. Conversely, those that build climate resilience will find opportunities: by withstanding, responding to and recovering rapidly from climate impacts, they will maintain operational continuity and strengthen their competitive edge.
And yet, investment in infrastructure resilience lags well behind what is needed. Part of the reason for this has been a lack of evidence about where and how to invest. But this is now changing, with tools and data available to help measure and manage risk.
The Physical Climate Risk Assessment Methodology (PCRAM) is a market leading methodology, developed in partnership with the Coalition for Climate Resilient Investment (CCRI) to improve the world’s resilience to climate change. PCRAM will give asset owners and operators the tools necessary to invest in resilience with certainty and confidence, helping unlock the capital investment needed to meet the challenges we face.
Introducing PCRAM
In 2020 Mott MacDonald began working with the Coalition for Climate Resilient Investment to equip infrastructure owners and operators to demonstrate the benefit of investment in resilience.
The result is the Physical Climate Risk Assessment Methodology (PCRAM). It is an open source resource created for the public good, to improve consistency in risk assessment and provide a common language between the infrastructure and financial industries. PCRAM is the first methodology of its kind, developed using real world case studies and rigorously reviewed by leading experts from a range of industries.
It brings together climate science, asset management, resilience practitioners and financiers to assess, design and quantify the resilience needs of infrastructure assets.
It can be used to identify material physical climate risks to an organisation’s assets and build resilience to improve performance and protect revenue. PCRAM helps decision-makers understand benefit-to-cost ratio, target investment, and plan programmes of investment that align with existing organisational and regulatory investment cycles.
The methodology can be applied to any physical asset or portfolio of assets, for any set of climate hazards. It is designed to enable owners and investors alike to develop their level of maturity in managing climate risks over time.
PCRAM can help you:
- Audit climate data
- Assess critical assets
- Identify resilience options
- Analyse financial and performance impact
PCRAM allows asset owners and operators to invest strategically and confidently to protect their assets and businesses from climate change.
Risk disclosure and management
As mandatory climate-related disclosures become more prevalent in infrastructure, organisations need to act now to set up the systems and processes to quantify their exposure to physical climate risks.
The Task Force on Climate-related Financial Disclosures (TCFD) was established by the global Financial Stability Board in recognition of the threat posed by climate change to capital and the worldwide financial system. It was tasked to develop a reporting framework that would help investors understand their exposure to risk and plan investments – or disinvestments – accordingly. TCFD reporting has already become mandatory for large companies in Canada, Hong Kong, New Zealand, Switzerland and the UK; while China, the EU, the USA and other G7 leading economies say they plan to adopt the framework.
TCFD requires companies to demonstrate understanding of the climate risks they face, how severely they could be impacted, and the financial consequences. They must also spell out how they plan to mitigate their exposure to risk. Companies that fail to adequately quantify risk and manage it will see investor confidence ebb away – and potentially the confidence of other stakeholders too, including government sponsors, regulators, civil society organisations and customers.
PCRAM dovetails with TCFD reporting, by helping organisations to both understand and quantify the climate risks they face, and to prioritise them as part of a climate risk management strategy.
Opportunities
Our expert climate team can work with you to assess your exposure to the impacts of climate change.
Climate risk assessment
We can help you identify the climate risks to your infrastructure assets. By combining localised climate data with our expertise in asset management, we can give you a detailed understanding of precisely where and how your organisation is at risk and align investment to your asset management objectives.
Resilience options: costed and designed
Our resilience practitioners, cost consultants and civil engineers can identify, cost and design the resilience interventions your asset requires and analyse the implications on performance, lifecycle and maintenance. Once the decision has been made, we can help with procurement, supervise construction and monitor the performance of the intervention.
