Financial flood risk exposure of Nikkei 225 Companies: An industry sector and regional facility-scale perspective

This study analyzes the characteristics of corporate financial flood risks across regions and industry sectors for the constituent components of the Nikkei 225 Index, representing 225 companies and more than 18,000 facilities. The modelling approach integrates hydrological datasets with multiple climate models and financial records of corporations and facilities. Using estimated property damage and business interruption losses at the facility, corporate and industry scales, the authors quantify expected annual damage (EAD) from flood risk and examine how financial risk exposure varies across regions, countries and industry sectors.

This study finds that the expected annual damage exceeds USD 8.2 billion by 2030, with approximately 64% of this risk originating from Asia and nearly 92% of losses concentrated in Asia, Europe and North America. About 60% of losses are derived from property damage to Asian-based facilities, while business interruption losses are driven by European and Asian operations. When benchmarked to earnings, sectors with high capital asset valuations, including utilities, information technology, consumer discretionary and industrials, show loss ranges exceeding 5%. The authors conclude that companies in these sectors may need to elevate the priority of flood-related financial risks, explore regional flood-driven financial risk ranking strategies in operations and supply chains, and consider flood insurance as a strategic response, while noting the importance of using multiple climate models and addressing key uncertainties in future research.