Climate Scenario Analysis: Guidance from the NGFS and CFRF
This Webcast is available on demand.

In spite of its effectiveness, scenario analysis is among the least mature elements of climate financial risk management. Theresa Löber, Head of the Bank of England’s Climate Hub, joins GARP Risk Institute Co-President Jo Paisley to discuss how recently published guides from the NGFS and CFRF can help firms develop and implement climate scenario analysis.

Scenario analysis is widely recognized as one of the most important tools for understanding the impacts of climate change on your organization. It can also help prompt longer term strategic thinking about risks and opportunities. Despite this, GARP’s second annual Global Survey of Climate Risk Management found scenario analysis to be among 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 utilize 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 Löber, 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 developed by the NGFS

  • 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 guide 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

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Theresa Löber - Head of Climate Hub, Bank of England

Theresa heads up the Bank of England’s Climate Hub, which leads the Bank’s policy response to the financial risks from climate change. This includes incorporating climate risks into the Bank’s supervisory approach, stress testing the UK financial system to the risks from climate change, as well as embedding climate risks into macroeconomic analysis. Internationally, the team contributes to a number of initiatives, such as the central bank and supervisors Network for Greening the Financial System, where the Bank leads the work developing reference scenarios. Previously she worked as a macroeconomist in different areas of the Bank, most recently as Senior Manager of the Global Surveillance Team within the International Directorate.

Jo Paisley - Co-President GARP Risk Institute

Jo Paisley is Co-President of the GARP Risk Institute (GRI), the thought leadership of GARP. Set up in early 2018, the Institute works across all risk disciplines, with Jo’s focus to date on climate risk management and scenario analysis, stress testing and operational resilience. Her career began at the Bank of England where she worked in a variety of roles, across macroeconomics, statistics, supervision and risk. Her last role was as a Director of the Supervisory Risk Specialists Division within the Prudential Regulation Authority, where she was heavily involved in the design and execution of the UK’s first concurrent stress test in 2014. She left the Bank in 2015 and joined HSBC as their Global Head of Stress Testing. She has also worked as an independent stress testing consultant, advising firms on how to get the most value out of stress testing.

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