When Harsh Physical Realities Meet Digital Opportunity

By Shirley Ben-Dak, General Partner (Mazarine Climate) 

Much of the global conversation (and funding) surrounding water has focused on water scarcity, on too little of our precious resource. Images of drought-prone areas, crop disasters, and bottled water distributed to residents during state of emergencies. But this is only part of the challenging puzzle that requires a shift in how we think about water within the context of risk and adaptation. 

Water abundance leading to flooding and storm disasters that have triggered infrastructure collapses across Spain, Portugal and France, impaired water impacting biodiversity and property values across coastal regions, and rising insurance premiums resulting from inadequate climate forecasting – these are all examples of pressing challenges resulting from our climate reality. Climate-induced water risks are no longer theoretical, but rather bottom-line business realities that impact all asset owners, from farms and water utilities to large commercial financial and real estate entities.

Overall, the current approach to managing water risk is inadequate. We are witnessing economic losses from water-related disasters exceeding $150 billion annually. Pressure on infrastructure and outdated data have contributed to dependence on limited analog remedies – ones that are no longer sufficient for the speed and scale of climate-induced water challenges. Can we really trust a map that hasn’t been updated to reflect real-time river conditions? 

Understanding climate risks means truly understanding water risks from a few different layers that can be broken down into seeing, deciding, and finally executing on:

(1) Visualisation (See the Risk)

To realize a resilient climate response, the first step is increasing asset owners’ ability to visualize risks and thus better prepare for an incoming flood, wildfire, landslide or extreme storm event. Even after such a damaging event occurs, being able to understand whether this was a random anomaly or likely a preview of more occurrences due to extreme climate conditions, understanding these patterns is a key initial step to deciding what to do about it. Think of this as being presented with a menu prior to making your decision on what to order. 

Often, adaptation is an afterthought, arriving late to the resilience game. This is not the result of humanity’s failure to care, but rather, the lack of intentional and practical decisions to invest in data collection, monitoring and predictive insights. Risks accumulate as a result and to our societal detriment. Without clear insight into how floods, erosion, land sinking, heat, and water patterns are changing, disasters end up feeling like unexpected shocks instead of warning signs.

While we can delve into the critical challenges all day long, we may as well adopt more of an optimistic lens powered by relevant Industry 4.0 technologies. These solutions, often software driven, generate, integrate, and interpret climate-risk data across time and space. These digital tools are foundational for real adaptation plans as they help us rebuild smarter, avoid repeated losses, and stop putting money into assets that will fail again. Let’s stop the endless cycle of investing in assets that aren’t properly planned to last.

These solutions lead to the second layer described below. 

(2) Decision Support (Deciding On Course of Action) 

Once asset owners are able to more adequately visualize water risks, the next step is to make more informed decisions and choose the course of action for faster, more accurate and more effective responses to some of those current harsh realities. Here decision support tools and scenario planning help asset owners unpack the tough, practical questions to address problems, whether that be to best monitor risk fluctuations over 5-30 year periods, redesign facilities, or elevate a road positioning. Asset owners will be better equipped to prevent future losses when equipped with the appropriate tools. A bit more structure here will help climate adaptation move from a reactive approach to one measured by prioritisation, predictive intelligence and risk levels. This approach will justify investments to key stakeholders, from boards to insurers.

Going back to the menu analogy, once you are able to visualize the different menu options, what should you pick based on specific dietary preferences or limitations. 

(3) Executing Physical Adaptation 

The final layer revolves around procurement (leasing/purchasing depending on the business model) of an actual solution, acquiring, installing, and maintaining adaptation solutions that reduce risk. This includes deployments such as flood defenses, drainage upgrades, slope stabilization, cooling systems, stronger power grids, and in some cases asset relocation. 

Such solutions often fall into construction, infrastructure and project finance domains, where often the digital data monitoring and decision-support tools meet physical realities. 

To conclude, as the saying goes “You can’t manage what you don’t measure”. Within the context of climate adaptation and water risks, this points directly to the Industry 4.0 toolbox, the heart of the Mazarine Climate thesis. 

Industry 4.0 technologies cover a wide spectrum of tools that help us see beyond traditional approaches and uncover risk patterns more effectively: satellite remote sensing, IoT monitoring, artificial intelligence, digital twins, etc. These all showcase ‘the art of the possibile’. Satellite-based synthetic aperture radar detects soil moisture and flood extent in near-real-time. Low-cost sensor networks provide granular data on flow rates, water quality, and infrastructure stress. This represents a fundamental shift from periodic sampling to continuous monitoring, from local observation to comprehensive spatial coverage.

In this challenging environment, reframing water through a business risk lens requires moving from the traditional “water industry” (think solely SDG6) —pipes, pumps, and treatment plants—to the “water risk industry” that helps businesses across different asset classes see, understand, and manage climate-induced water threats (enter SDG13). While water risks aren’t going away and are likely to intensify leading to exacerbated losses and further unintended consequences, we can improve our ability to prepare for, adjust to, and deal with these risks. Technology helps us see risk with real-time, high-resolution data, understand risk with modeling and predictive analytics, and manage risk with practical solutions we can deploy today.

Interested in exchanging notes on this critical topic? Email shirley@mazarineclimate.com