Resilience — Primer

Resilience — Primer

The one idea

A company's sites sit in the physical world. A river can flood the factory, a cyclone can tear off the warehouse roof, an earthquake can crack the building, drought can starve it of water. These hazards do direct damage — and they cost money.

Direct Physical Loss asks a simple question: for each hazard, at each site, how much money is at risk — today and in future climate scenarios?

It answers site by site, because a coastal plant and an inland office are not exposed to the same hazards, and it separates two very different kinds of cost: the damage to the asset and the revenue lost while the site is out of action.

The words you will meet

1. Hazard

A physical peril that can strike a site: flood, cyclone, earthquake, wildfire, hail, extreme heat, extreme rain, landslide, expansive-clay ground movement, subsidence, drought. Darwin prices eleven of them.

2. Intensity

How strong the hazard is at that exact spot — the depth of the flood water, the speed of the cyclone wind, the shaking of the quake. Read from global maps at the site's coordinates.

3. Return period

How often an event of a given size happens. A "1-in-100-year flood" is a severe flood with a 1 % chance of happening in any single year. Rare events are worse but happen seldom; frequent events are milder but happen often — the risk is the balance of both.

4. Damage curve

The bridge from intensity to loss. It says, for this type of building, this much flood depth destroys this share of its value. A shallow flood ruins little; a deep one ruins a lot — and the same depth harms a warehouse and an office differently. Every curve comes from published science.

5. Average Annual Loss (AAL)

The headline number. Instead of quoting one dramatic event, Darwin averages the damage across all return periods, weighted by how likely each is — giving the expected loss per year. A ~30 % loss on a rare 1-in-100-year flood becomes a small, honest percent-per-year figure, dominated by the frequent moderate events a site actually faces.

6. Property damage vs business interruption

Two costs, kept apart:

• Property damage — the value of the building and its contents physically destroyed (a one-off hit).
• Business interruption — the revenue lost while the site is shut for repair (a yearly flow). They are never added together, because one is a lump of capital and the other a stream of income — mixing them would be comparing apples to a monthly salary.

How to read the results

• Every figure is shown at three future dates — 2035, 2050, 2080 — under an optimistic and a pessimistic climate scenario.
• Each figure is a change from today ("how much does climate add?"). For hazards that don't change with the climate — earthquakes, hail, subsidence — that change is near zero, so Darwin also shows the absolute level, so a genuinely high-risk site never looks safe just because it was already at risk yesterday.
• Negative means loss. A more negative number is a bigger expected loss.

How it fits with the Nature Stress Test

Direct Physical Loss lives inside the Resilience module, next to the Nature Stress Test, which prices a different thing — the loss when the free services nature provides (pollination, water purification, healthy soils) degrade. Physical damage and nature dependency are two faces of the same site's risk, so Darwin puts them on the same screen, in the same money terms. Where both would price the same revenue loss, the direct physical estimate takes precedence, so nothing is counted twice.