Climate risk management is recognized as a top priority by public and private players globally. Financial firms, including banks, pensions funds and investment funds, asset management and insurance groups, are at the forefront of this endeavor to cope with rising regulatory requirements and reputational pressures.
The CLIMAFIN team has developed reference models in the scientific community for the assessment of climate financial risks, combining the analysis of large and granular datasets on financial and industrial relationships with new algorithms and models to estimate the propagation of climate shocks and their resulting impacts on financial assets.
SS&C Algorithmics is a major provider of financial risk management software, Algorithmics is working to deliver the best product to manage climate risks, with two main objectives in mind:
• Ensure that the solution incorporates advanced research findings and best practices dictated by international organizations and supervisory authorities.
• Integrate climate risk quantification into a production-level risk management framework to assess and analyze financial risks holistically.
“The combined offering of CLIMAFIN and Algorithmics leverages state of the art data and models on climate-related financial risks within an integrated, high performance simulation environment. It allows financial actors to timely monitor their exposures and make sustainable investment decisions” says prof. Battiston. The solution enables users to quantify the correlated effect of market movements and climate stresses on a firm’s portfolio, and their impact on market and credit risk calculations. Precise risk contributions stemming from the different factors shall be accounted for, with a scenario-based approach to risk aggregation and portfolio construction.
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