Moody’s Corporation has acquired RiskFirst, a UK fintech company providing risk analysis solutions for asset managers, asset owners and consultants.
A day earlier it announced having taken a majority stake in Four Twenty Seven, a California-based company providing data and analysis related to physical climate risks – risks linked to the impact of climate change itself as opposed to efforts to contain it.
The acquisitions are for two different parts of Moody’s as a company. The RiskFirst acquisition is for Moody’s Analytics while the deal with Four Twenty Seven is for Moody’s Investors Service, the credit rating and research arm.
RiskFirst’s oldest product is the PFaroe platform, which helps manage asset and liability risk in defined benefit (DB) plans, mainly in the US and UK. According to Moody’s it is used by over 3,000 plans with more than $1.4trn (€1.3trn) in assets.
“Adding RiskFirst’s platform to Moody’s Analytics’ product offering creates significant opportunities for growth and demonstrates our commitment to extend our reach and capabilities to the buy-side and asset owner community,” said Mark Almeida, president of Moody’s Analytics, in a press release.
The terms of the transaction were not disclosed. RiskFirst generated £16.5m (€18.4m) of revenue in 2018.
Four Twenty Seven, meanwhile, will be an affiliate of Moody’s Investors Service, continuing to operate under its existing brand.
Moody’s said the transaction would strengthen its research on incorporating climate risk into economic modelling and credit ratings, and complemented its recent acquisition of a majority stake in Vigeo Eiris.
Emilie Mazzacurati, founder and CEO of Four Twenty Seven, said: “Moody’s global coverage and analytical capabilities, combined with Four Twenty Seven’s comprehensive climate risk data and intelligence, provides an ideal path to continue our work helping market participants integrate potential climate impacts into risk management and investment decisions.”
DWS, one of the first asset managers to go public about its work and stance on physical climate risk, worked with Four Twenty Seven to develop its approach.
The narrative about investment and climate change has been dominated by the concept of transition risks rather than physical risks, but the latter have begun to grab more attention.
According to Schroders, another asset manager that has warned about overlooking physical climate risks, the world is on course for a long-term temperature rise of 3.8°C above pre-industrial levels – far from the target set under the Paris Agreement.
National commitments to net-zero greenhouse gas emissions – recently adopted by the UK and France, for example – stood in contrast to sharp growth in energy produced by fossil fuels, it said.