Kolen, Professor by special appointment of Enterprise Risk Management, explains that in reality, some flood scenarios cannot occur at the same time (podcast in Dutch).

Unnecessary costs

According to Kolen, this way of modelling can lead to unnecessary costs across the financial system. Risk overestimation may result in higher insurance premiums, stricter mortgage conditions and climate adaptation measures that are more expensive than needed. By treating mutually exclusive scenarios as if they could all happen together, models can give a distorted picture of actual exposure.

Delta & Duiten is a podcast of the public-private partnership NL AAA Klimaatbestendig and is supported by the Ministry of Infrastructure and Water Management. Host Maarten Bouwhuis talks with policymakers, academics and financial experts about climate adaptation and its physical and financial consequences.