Glossary
Average Annual Loss (AAL)
Average Annual Loss (AAL)
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CONTENTS
Average Annual Loss (AAL) is the financial loss an asset or portfolio can expect from climate hazards in a typical year, averaged across the full range of event probabilities.
Example in context
You're a portfolio manager comparing two warehouses with identical rents. One carries an AAL of €120k, the other €15k — the gap tells you how to price the difference into rent, capex, and the acquisition offer.
Why it matters
Without a single expected-loss figure, climate risk can't enter a model or a budget. AAL is the number underwriters and investors plan against. EarthScan calculates AAL per asset from damage curves, return periods, and asset attributes.
Get AAL for every asset
FAQ
What is the difference between AAL and CVaR?
AAL is the loss in a typical year; CVaR captures the severe tail — the rare, large loss.
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