Fig. 4: Scatter plot for the joint Expected Annual Impacts (EAI) and 250-year Return Period (RP250) equity loss distributions for the year 2040, 86 firms with available asset-level data, considering acute risks only.
From: Asset-level assessment of climate physical risk matters for adaptation finance
Scenarios are shown in different colours and dot styles, respectively: Representative Concentration Pathway 2.6 (RCP2.6; green plus), RCP4.5 (red circle), RCP6.0 (blue diamond). The marginal distributions for Expected Annual Impacts (EAI) and 250-year Return Period (RP250) are represented, respectively, on the bottom and right axis of the chart, approximated as kernel density plots for all scenarios and distinguished by the respective colours. The scatter plot represents the joint distribution. The loss is defined as \(\frac{{\tilde{V}}_{0}-{V}_{0}}{{V}_{0}}\), where V0 is the equity value without the acute shock and \({\tilde{V}}_{0}\) is the shocked equity value. Thus, a negative value represents a loss (e.g., −4% represents a decrease in equity value of 4%). The black line labelled equal shock line represents the points where the loss conditioned to EAI is the same as the loss conditioned to RP250, implying no exposure to tail acute risks. Firms lie on the equal shock line (signalling no RP250 exposure) or below it (signalling high RP250 exposures). The dashed lines represent a 0% change in equity value under EAI (vertical line) and RP250 (horizontal line). Note that, for readability, the x axis left limit is set to −0.7%.
