Climate Scenario Analysis for Transition Risk Management

This document is a technical report that outlines a solution for assessing transition risks related to climate change. It details the complexities involved in calculating the impact of climate scenarios on a firm's balance sheet, emphasizing the need for specific expertise and high accuracy. The solution aims to help clients achieve regulatory compliance by aligning with current climate risk regulations, particularly supporting NGFS scenarios. It integrates climate risk into an advanced risk management framework, enabling the calculation of Value-at-Risk (VaR) under transition scenarios. Furthermore, the report describes how the solution facilitates climate-aware portfolio construction, allowing firms to set target returns while meeting sustainability goals. It also supports sophisticated stress testing and what-if analyses, empowering decision-making based on climate metrics. Overall, the report presents a comprehensive approach to managing climate-related financial risks and enhancing resilience in investment strategies.