A perspective on nonstationary climate and water risk, its predictability, simulation and on the use of financial instruments to manage such risks. The talk will focus on 3 examples. The first draws from our work on risks associated with the mining industry and highlights the significant spatial and temporal correlation or concentration of risk across global assets that may be owned by the same company. Implications for supply chains, commodity markets and risk premiums are briefly discussed.The second example focuses on livestock mortality in Mongolia at a national scale that is determined by a combination of climatic factors. In this example, I will introduce a stochastic simulator that can allow a characterization of the aggregate risk accounting for the spatial correlation of tail risk. An application to index insurance for the Government of Mongolia provides the context. The third example pertains to the securitization of financial risk for an energy utility in Uruguay, where both the utility and the government face significant financial risk in the event of a drought disrupting hydropower production. A strategy for the simulation of the system, and of a combination of financial instruments to select the optimal risk hedging strategy through an allocation to the different financial instruments is provided.

Dr. Upmanu Lall is the Director of the Columbia Water Center and the Alan and Carol Silberstein Professor of Engineering, and the Chair of the Dept. of Earth & Environmental Engineering at Columbia University. He has broad interests in hydrology, climate dynamics, water resource systems analysis, risk management and sustainability. He is motivated by challenging questions at the intersection of these fields, especially where they have relevance to societal outcomes or to the advancement of science towards innovative application.