Finance Tools
Climate Change Cost Impact Estimator
Estimate the annual financial cost impact of climate change using exposed cost base, impact probability, and expected cost increase severity.
Estimate the expected annual cost impact from climate change using a simple exposure model: exposed cost base × probability × severity.
Portion of annual operating costs likely to be affected (energy, logistics, inputs, repairs, downtime).
Estimated likelihood that climate conditions materially increase costs within a year.
Percent increase applied to exposed costs if the impact event occurs.
Model — Expected annual cost impact = Exposed costs × Probability × Severity.
Scenario Cost Impact (if occurs): $1,800,000
Expected Annual Cost Impact: $360,000
Inputs — Exposed costs: $12,000,000, Probability: 20.00%, Severity: 15.00%
How to use this climate change cost impact estimator
- Enter the annual cost base exposed to climate impacts.
- Enter the probability of a climate-related cost impact per year.
- Enter the expected cost increase severity if it occurs.
- Review expected annual cost impact and scenario cost impact.
Example
A company has $12,000,000 of annual costs exposed to climate impacts, with a 20% chance of disruption and a 15% cost increase if it occurs.
- Exposed annual costs: $12,000,000
- Probability of cost impact: 20%
- Cost increase severity: 15%
- Scenario cost impact (if occurs): $1,800,000
- Expected annual cost impact: $360,000 (12,000,000 × 0.20 × 0.15)
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