December 4, 2025

SS5/25 Raises the Bar – Why Physical Climate Risk Data Just Became a Regulatory Priority for Banks and Insurers

On 3 December 2025, the UK Prudential Regulation Authority (PRA) published Supervisory Statement 5/25 ‘Enhancing banks’ and insurers’ approaches to managing climate-related risks’. SS5/25 replaces the original 2019 framework (SS3/19) and represents the most substantial tightening of climate-risk expectations for UK lenders and insurers to date.

The PRA has moved beyond high-level principles and introduced clear operational, data, granularity, and scenario-analysis expectations that all regulated firms must meet. A mandatory internal review, including gap analysis and a board-approved roadmap, must be completed by June 2026, and the guidance strongly emphasises the need for robust, forward-looking, and spatially granular physical climate-risk data.

As a UK based provider of high-resolution physical climate risk and biodiversity datasets, Map Impact welcomes SS5/25 as an important step in closing the gap between climate science and financial risk management. The new expectations align directly with our mission of supplying regulatory grade, property level climate data to help firms make informed lending, underwriting, investment, and risk decisions.

A New Regulatory Era – From Climate Awareness to Climate Competence

SS5/25 recognises three realities about climate change that the financial sector can no longer ignore:

  1. Physical risks are accelerating; including heat stress, drought, and wildfire, which now sit prominently alongside flood and storm as core UK financial risks.
  2. Risks are systemic and non-linear; they will affect every geography, every sector, and every portfolio.
  3. Future losses depend on today’s decisions; firms that lack clear understanding of climate exposure will misprice risk and misallocate capital.

Importantly, the supervisory statement makes physical risk a first-order concern. Firms must now assess how local environmental conditions amplify hazards, how risks evolve under climate scenarios, and how these factors translate into expected losses, capital needs, and business-model resilience.

This marks a shift from climate risk as a ‘sustainability topic’ to climate risk as a core determinant of financial soundness.

Granular Physical Data – No Longer Optional

While SS3/19 allowed firms to begin building conceptual frameworks, SS5/25 sets precise expectations for data, models, assumptions, proxies, and supplier governance. The PRA is clear:

Firms must identify data gaps, justify the proxies they use and demonstrate an understanding of data uncertainty, and ensure climate data are sufficiently granular to reflect the true risk profile of their portfolios.

This directly addresses the limitations of legacy hazard maps that operate at regional or postcode scales. SS5/25 emphasises:

  • Property level exposure assessment
  • Decision useful data for portfolio segmentation
  • Forward looking trajectories under climate scenarios (RCPs/SSPs)
  • Integrated understanding of hazard × exposure × vulnerability

At Map Impact, these principles underpin our four core UK national datasets:

  1. HeatView – extreme-heat exposure and future temperature stress
  2. DroughtView – soil moisture deficit, hydrological stress, and drought vulnerability
  3. WildfireView – ignition probability, spread potential, ember risk, and landcover vulnerability
  4. BiodiversityView – habitat type and condition, enabling hazard amplification and vulnerability modelling

Together, these datasets provide the granularity and scientific rigour that SS5/25 explicitly calls for, offering firms direct compliance value while improving risk insight.

Scenario Analysis – The PRA’s New Cornerstone

A significant new requirement is the strengthening of Climate Scenario Analysis (CSA). SS5/25 expects firms to:

  • Use scenarios that reflect realistic pathways of physical risk intensification.
  • Assess impacts at geographic and sector specific granularity.
  • Incorporate severe but plausible events, sensitivity tests, and, where material, reverse stress tests.
  • Link scenario outcomes directly to strategy, risk appetite, pricing, and capital adequacy.

Map Impact’s datasets are fully aligned with UKCP18 climate projections, enabling firms to:

  • Model how risk evolves over time under different temperature pathways.
  • Assess how climate risks shift PD/LGD for loan books and counterparty risk profiles.
  • Understand the long-term viability of lending and underwriting strategies.

In particular, wildfire and heat extremes are highlighted in SS5/25 as under-assessed UK risks. These are exactly the areas where Map Impact provides new analytical capability.

Counterparty, Portfolio, and Business-Model Risk

SS5/25 also requires firms to conduct structured assessments of:

  • Counterparty specific physical risk
  • Sector vulnerability
  • Geographic concentration
  • Supply chain exposure
  • Business model resilience under climate stress

These assessments are non-negotiable for material risks and must be based on evidence, not assumptions.

Map Impact enables firms to:

  • Enrich credit assessments with physical risk scores.
  • Identify vulnerable locations and high-risk concentration pockets.
  • Support Expected Credit Loss (ECL) adjustments under IFRS 9.
  • Evaluate collateral impairment and insurability challenges.
  • Inform underwriting restrictions, adaptation requirements, and risk-based pricing.

This aligns directly with the PRA’s expectation that climate risk is integrated into credit risk, market risk, operational resilience, underwriting, and the reserves for capital and liquidity.

Why SS5/25 Creates a Step Change in Industry Demand

The combination of regulatory pressure, supervisory scrutiny, and enhanced expectations will accelerate adoption of granular physical risk data across the sector.

SS5/25 creates demand for:

  • High-spatial resolution hazard data
  • Forward looking projections aligned to climate scenarios
  • Integrated landcover and condition data for susceptibility modelling
  • Transparent methodologies supported by peer-reviewed science
  • Portfolio-ready analytics at UPRN level

These are Map Impact’s core strengths.

Where global vendors may use coarse global climate models with limited transparency, Map Impact provides UK-specific, transparent, high-resolution, decision ready climate datasets, precisely the kind of data SS5/25 expects firms to rely upon.

A Regulatory Turning Point – and an Opportunity

Climate-related losses will rise in the decades ahead, but so too will opportunities for:

  • Risk differentiated lending
  • Resilient underwriting
  • Climate aligned capital allocation
  • Product innovation in adaptation finance
  • Investment in resilience infrastructure
  • Reduced losses and enhanced long-term profitability

SS5/25 encourages firms to move beyond compliance and begin using climate intelligence as a strategic differentiator.

At Map Impact, we believe the firms that invest in high quality physical risk analytics today will be best positioned to capture tomorrow’s opportunities, and avoid tomorrow’s losses.

How Map Impact Can Help

We provide the UK’s most detailed datasets for:

  • Heat hazard
  • Drought hazard
  • Wildfire hazard
  • Nature / Biodiversity score

At scales suitable for:

  • ICAAP, ILAAP and capital planning
  • ECL provisioning
  • Underwriting and exposure management
  • ORSA and SCR modelling
  • Portfolio concentration and materiality assessment
  • Climate scenario analysis
  • Strategic planning and risk appetite formation

We can work with lenders, insurers, brokers, and data partners to help them meet the expectations set out in SS5/25, quickly, transparently, and confidently.

 

Get in Touch

To learn more about how Map Impact can support your SS5/25 implementation planning or to request sample data, portfolio analysis, or technical documentation, please contact: info@mapimpact.co.uk