From Macro Climate Risk to Site-Level Corporate Loss: A Geoclimatic Probable Maximum Loss Framework

Macro climate and climate-finance research quantify aggregate damages, valuation effects, and financial propagation, but they provide limited guidance on how a macro climate state becomes an exposure at a particular operating site and within a particular business process. We develop Geoclimatic Probable Maximum Loss (GCPML), a transparent macro-to-micro framework that evaluates physical hazards at verified facility coordinates, separates site-specific physical risk from ex ante hazard-importance weights, transmits hazards through damage mechanisms to eleven business processes, mediates exposure through audit-based organisational resilience, and scales the result by production value. The terminology denotes a conditional management assessment under existing audited protections and no additional adaptation; the pilot does not estimate a loss quantile. Macro financial evidence on climate-policy uncertainty describes how climate risk is priced and propagated; GCPML supplies the complementary upstream physical and organisational exposure that can subsequently be linked to cash flows, financing conditions, and valuations. To assess feasibility, we apply the framework to a pilot study of 17 audited sites. The pilot identifies material address-geocoding errors and shows that coordinate-only screening retains much of the intensity ranking (Spearman correlation 0.917) but reproduces the dominant process area at only five sites; the audit relocates it at the other twelve. The higher correlation for absolute exposure is partly mechanical because screening and full assessment share the same site production values. The exercise evaluates implementation, sensitivity, and diagnostic content, not predictive accuracy or actuarial calibration.