top of page
  • Writer's pictureGustavo Bernal Torres

Assessing Financial Risks from Physical Climate Shocks: A Framework for Scenario Generation

The World Bank has published a framework to generate climate scenarios to be used in stress tests.

  • Most advances in climate stress test focused on transition risk, using mitigation scenarios elaborated by process-based IAM and recently by the NGFS.

  • The paper identifies five areas, or risk drivers, that make a material contribution to physical climate risks to the financial sector and that are not consistently included in current climate scenarios and tools: (1) extreme weather events; (2) uncertainties in climate models; (3) compound scenarios; (4) indirect economic impacts of shocks; and (5) feedback between the real economy and the financial sector.


Source: https://www.financialprotectionforum.org/publication/assessing-financial-risks-from-physical-climate-shocks-a-framework-for-scenario

0 comments

Recent Posts

See All

Transitioning businesses to employee ownership has the potential to significantly reduce the overall wealth gap as well as the racial equity gap. But it will take capital investment to scale. An inspi

A Response to “The Divestment Delusion” In August 2021, Nigerian Vice President Yemi Osinbajo bemoaned fossil fuel divestments, concluding that “the transition must not come at the expense of afforda

bottom of page