Presentation on theme: "® GLG Institute Professional Education On Anything. Anywhere. SM Hedging Planetary Risk & Climate Change: The Biggest Unmanaged Factor In Investing Predictions."— Presentation transcript:
® GLG Institute Professional Education On Anything. Anywhere. SM Hedging Planetary Risk & Climate Change: The Biggest Unmanaged Factor In Investing Predictions And The Impacts On Your Portfolio Simon R. R. Atkins CEO, Atmospheric Scientist; Advanced Forecasting Corporation [AFC] GLG Institute
® Professional Education On Anything. Anywhere. SM Biography Simon Atkins is CEO of Advanced Forecasting Corporation [AFC], a think-tank in global Planetary Risk Management and a leader in climate change hazard consulting for businesses and investors that are affected by natural- based threats, human-caused perils, and economic complexities. For the last 20 years, Mr. Atkins has provided strategic expertise in advanced weather risk modeling and advises on vulnerability assessment hotspots for optimized security planning and business continuity. He is a Ph.D. candidate in biometeoelectromagnetics, and has an International MBA from the Helsinki School of Economics and a B.Sc. in atmospheric physics from Cornell University. For further information or to schedule a consultation with Simon Atkins, please contact your GLG representative.
® GLG Institute Professional Education On Anything. Anywhere. SM Table Of Contents Introduction: Are we passengers or drivers on this planet? Industries Affected: Present Impacts / Losses Are Real -- $0.55 Trillion Real In 2005 Okay, So What Is Planetary Risk, And Why Is It Potentially Becoming Your Greatest Unmanaged Investment Factor To Implement A Plan For? Industries Affected What Is Shifting, And By How Much, And Where, And When? Quick But More Accurate Word On Global Warming Climate Change (3 Parts) Global Hotspot Hazard Zones: Present & Future Trouble-Spots USA Planetary Risk Predictions: Threat Identification Maps Out 18-Months How Do We Know This? (Forecast Derivations) What Is Our Hit Rate Accuracy? Some Impacts On Economies, The Environment, Societies, Industries, Businesses, Investment Portfolios...And You Simons Strategies For Exposure Minimization Next Steps, Thinking Well Beyond Out Of The Box For Opportunistic Business Continuity
4 Are we passengers or drivers? Most evidence supports the former.
5 Introduction: Present Impacts & Losses Are Real To Many 90% of Americans live along the coasts, near flood zones, earthquake fault lines, or in other locations that are at a high or moderate risk or being hit by a major natural disaster 87% of businesses are negatively impacted by adverse weather at least 4x/year Average median known climate hazards loss (some information taken from citations of 140 different annual reports on Fortune 1000 firms) ranges from: Low-end: $50,000 loss on $1.7M revenue (2.9%) to High-end: $175,000,000 loss on $12B revenue (1.5%) But 37% of businesses had financial effects worth 5% - 23% of revenue!
6 Introduction: Present Impacts & Losses Are Real To Many If the majority of these businesses gamble(d) on weather / planetary risk, the respective accuracy would be approximately 42%-57% (a coin flip) But for 1% increase in accuracy (with intelligence), revenue saved on losses is ~ 2% And for 10% increase in accuracy (w/ intelligence), revenue saved on losses is ~ 39% With 80% total accuracy (from intelligence), revenue saved on losses is ~ 58%-184%!! Annual total climate refugees totaling one-third the USA population equivalent Up to 20% may come to the USA based on destructive climate, but few laws allow it.
7 What Is Planetary Risk? Why Is It Most Unmanaged? Can you gauge these threats...can you quantify the risk? Natural-BasedHuman-Caused Earthquakes, volcanic eruptions, methane / carbon burps (oceanic / permafrost) Terrorism, geo-political tension Power / Energy Grid Disruptions Hurricanes, windstorms, tornadoes, blizzards, ice-storms, severe storms, Using weather as a weapon (ex. re-directing a hurricane to hit your enemy) Heat-waves, life-threatening coldAnthropogenic climate change Viral epidemics, technological displacement (sonar research, oil drilling, bombs, etc.) Rainstorms, river flooding, ice jams, snow melt floods Solar cycle disruptions, solar radiation aberrations, Milankovitch Theory Ocean current aberrations (Thermo-Haline Circulation) Electromagnetic transference lines, geothermal warming, Magnetic North polar shifts Natural-based risks and human-caused threats that can trigger adverse economic, environmental and/or societal impacts.
8 Industries Affected By Climate Change Hazards & Planetary Shifts AgribusinessChemicalsCommodities ConstructionEnergyEnvironment EventsFinanceForensics HealthInsuranceInvestments Manufacturing Population Displacement Reinsurance RetailSeasonal PlanningTelecommunications TourismTransportTravel Increasing weather volatility and climate pattern alterations are challenging a wide spectrum of businesses and industries: utility prices, transportation schedules, crop yields, construction codes, municipalities, school districts, food processors, retail sales and real estate just to mention a few of a long list of sectors whose revenues, costs and financial performance are sensitive to weather volatility. Planetary shift disasters can affect economies for months and years to come.
9 What Is Shifting, And By How Much, And Where, And When? Space weather is constantly changing. Geothermal heat fluxes are constantly changing. The electromagnetic flux (aka communication interface) between the Sun and the Earth is the key catalyst that is causing planetary shifting, and its volatility will surge higher through December 2012, the end of the solar cycle peak. Climate change cluster spots (similar to cancer clusters) are forming from electromagnetic transference lines -- some will benefit, most will experience traumatic overhauls from historical normals.
10 Why Is Climate Changing? Why Are Weather Patterns Becoming More Erratic, More Volatile & Stronger? Extraterrestrial Effects / Causes 1) Solar radiation flux changes 2) Solar wind / electromagnetic shifts 3) Space forces on revolution around Sun Terrestrial & Atmospheric Effects / Causes 1) Earth rotation / axis 2) Ocean current aberrations 3) Ocean density metamorphosis 4) Electromagnetic imbalances (from core) 5) Atmospheric interface changes Anthropogenic Effects / Causes 1) Urban Heat Islands 2) Deforestation 3) Technology (SONAR) 4% 31% 57% P.S. 8% -- we dont know Climate is always changing in cycles, like the tides. Weather shifts are also cyclical. 1) More people are moving toward climate hazard hotspots. 2) Populations are growing rapidly in highest weather volatility zones. Let Us Remember That
11 A Quick, More Accurate Word On Global Warming Climate Change: Part I So-Called Mounting Evidence On Human-Caused Climate Change You have read and heard about climate change reports, most coming from the IPCC, citing a profound effect on Earth's ecosystems. We agree, climate change is occurring. But these reports put the overwhelming majority of the blame on human-made Greenhouse gases (GHGs). We strongly disagree. The IPCC cites a so-called long list of evidence: Glacial lakes are increasing in both size and number, potentially leading to deadly floods Ice shelves are crumbling away and melting. In addition, the permafrost in mountainous regions and at high latitudes is warming (melting) increasing the danger of land slides. As the temperature of rivers and lakes rises, their thermal stratification and water quality is changing. River currents, affected by melting glaciers and ice, are speeding up during the spring. Springtime is starting earlier, causing plants to bloom earlier and changing the migrations of birds. Many plants and animals are expanding their habitats into mountainous regions and higher latitudes that are becoming milder. Natural geothermal warming cycles. Amount of solar radiation/activity is increasing. Electromagnetic shifts with higher frequencies in the north. THE REAL CAUSE Natural geothermal warming cycles. Natural geothermal warming cycle is in an increase mode.
12 A Quick, More Accurate Word On Global Warming Climate Change: Part II The combination of more automated weather recording sites in urban centers, increasing geothermal warming (helped by a 50-year solar cycle that warms the lithosphere through increased electromagnetic radiation) both account for a large part of the increased temperatures. Of course, to be environmentally-conscious is a very positive action. If the truth and all the important facts on climate change were out in the public eye, it would not be the extremely controversial subject that is so hot today.
13 A Quick, More Accurate Word On Global Warming Climate Change: Part III One Prediction From That Alone... MAJOR FLOODING IN NORTH AMERICA, PARTICULARLY DOWN THE MISSISSIPPI RIVER; IN FACT, THERE IS ABOUT A 5% PROBABILITY THAT A SCENARIO OF WIDENING THE MISSISSIPPI BY 5 MILES IN YEARS FROM NOW COULD OCCUR – AND THAT COULD DRAMATICALLY ALTER MANY ASPECTS OF THE US ECONOMY. Geothermal Warming & Expansion Increase In Volcanic Activity Melting Of Polar Ice & Permafrost & Glaciers Cause: more clouds, more storms, more tropical moisture into the MS River Cause: more water volume into the MS River from the north
14 Hotspot Hazard Zones -- Present & Future Trouble-Spots
15 These are the ones we will concentrate for now...but there are many more... USA Planetary Risk Predictions: Threat Identification Maps
22 How Do We Know This? What Is Our Hit Rate Accuracy? Technology has allowed many advances...if you know WHAT to program into a computer...and if you know by HOW MUCH each parameter accounts for. Development of the combination of research, science, business, statistics, think-tank collection of intelligence, and a very open mind: Specifically...AI threat modeling, climate change stochastic computations (proprietary blend of historical intelligence, consensus programming, and genetic algorithms) The Galileo Analogy -- most present-day climate change understanding is equivalent to saying the Sun spins around the Earth. Humbly-speaking, lets wake-up and look at this from a bigger view: were not the be-all-and-end- all. Start with solar and magnetic drivers. Accuracy of AFCs planetary risk predictions: 71%-89% Accuracy of random guess-work predictions: 0%-17%
23 Some Impacts On Economies, The Environment, Societies, Industries, Businesses, Investment Portfolios...And You Change in...Will cause...Impact example Increase in heat waves Energy grid challenges Energy price increases More frequent floods; expanded drought zones Tightened food supply; more crop disease Food price increases Higher proportion of intense earthquakes Greater magnitude of damage to transport and infrastructure Construction costs increase, boom in construction? New Geo-political trading blocks (ie. new Cold War) Redistribution of energy- givers and energy-takers Surprising and dramatic country status reversals Volcanic hostilities: another Pinatubo eruption by 2012 Dramatic global cooling 9-34 months later Higher energy demand, higher mortality rates, etc.
24 Simons Strategies For Exposure Minimization: Next Steps, Thinking Well Beyond Out Of The Box For Opportunistic Business Continuity Gather intelligence on custom hotspots (those that affect your industry), both for present locations and most likely shift-to spots. Go with logic, that which makes sense. Sometimes, we all get brainwashed temporarily. The subject of climate change is now huge: it has a political agenda too. There is a lot of fear -- scientists not being able to express their real data and opinions. My prediction is that the world will talk about global cooling before not too long. Increase contrarian wisdom...and investments (for example, currently Global Warming public, scientific validity is switching 180 degrees). Rank the risks in terms of prediction confidence and probability of occurrence.
25 Simons Strategies For Exposure Minimization: Next Steps, Thinking Well Beyond Out Of The Box For Opportunistic Business Continuity Assign monetary impact to low, medium and high possibilities. Draw up tertiary and quaternary (not just primary and secondary) effects of the top 5 highest ranked threats. Develop a monitoring, strategic evaluation, and decision-science recommendation system. Monitor closely the changing Annual Reports where businesses are factoring in more plans to instill risk management into minimizing losses based on climate change / planetary risks.
26 Q & A
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