Climate Scenario Analysis: Guidance from the NGFS and CFRF

Scenario analysis is widely recognised as one of the most important tools for understanding the impacts of climate change on your organisation. It can also help prompt longer term strategic thinking about risks and opportunities. Despite this, findings from GARP’s second annual Global Survey of Climate Risk Management found scenario analysis to be amongst the least mature elements of climate financial risk management across firms. It is clear that a significant gap exists between the need for climate scenario analysis and the capabilities to fully utilise this tool.

It is this gap that recently published guides from the NGFS and CFRF hope to address. The NGFS Guide to climate scenario analysis for central banks and supervisors and the Scenario Analysis chapter from the Climate Financial Risk Forum Guide 2020, both published in late June, will provide firms with an important insight into emerging regulatory activity, as well as provide practical steps for developing the use and deployment of scenario analysis.

To help us explore this set of resources we are fortunate to be joined by Theresa Lober, Head of the Bank of England’s Climate Hub. As part of her role, Theresa has worked closely with the NGFS on the production of these publications and is ideally situated to help us digest their contents.

Through this webcast you will gain an understanding of:

• The three reference scenarios laid out in the NGFS Guide
• Orderly: Early, ambitious action to a net-zero CO2 emissions economy;
• Disorderly: Action that is late, disruptive, sudden and/or unanticipated;
• Hot house world: Limited action leads to a hot house world with significant global warming and, as a result, strongly increased exposure to physical risks
• The guidance for regulators and what this means for financial firms moving forward
• Practical advice for developing and implementing climate scenario analysis, as presented in the CFRF Guide

Speakers

Theresa Löber, Head of Climate Hub, Bank of England

Jo Paisley. Co-President, GARP Risk Institute