ESG Stress Testing for Financial Institutions

ESG Stress Testing for Financial Institutions
A 4-part, 12-hour online program

Date: 20^th - 23^rd February 2023

WHY THIS COURSE?

For financial institutions, measuring and managing market and credit risk is a relatively straightforward process done through established tools, models and methodologies. However, accurately identifying and measuring the complex risks directly associated with climate change (and other important events) is a significantly more challenging task. It is, however, a task that financial institutions must now undertake, and with a high degree of accuracy, in order to satisfy stakeholders and supervisors. Closely linked to identifying and measuring climate related risks is ESG disclosure and scenario analysis. Again, two new and specialised activities that must now be understood by financial institutions and those who regulate them.

As well as the inherent importance of being able to accurately assess the climate related risk of financial portfolios, financial regulators are now requiring the effective linkage of climate related disclosure and scenario analysis, and the development of rigorous holistic stress testing programmes. Through the development and adoption of such programmes, financial institutions will be able to strengthen their resilience and risk management frameworks against climate related risks and other ESG related metrics.

Course objectives:
The objective of this 12-hour programme will allow attendees to:
- Gain an understanding of what exactly is climate risk and how it affects financial institutions
- Know what climate risk disclosures are and look like
- Understand key terms and projection metrics
- Evaluate data sources and scenario generation
- Assess what modelling approaches are applicable for stress testing
- Identify the role of regulatory authorities
- Understand risk mitigation and control tools

Fee

1 participant: RM4,000/$995
2 participants: RM8,000/$1,990
3 participants: RM12,000/$2,985
4 participants: RM16,000/$3,980
5 participants: RM20,500/$4,975

Discounts are available for group bookings. Please contact us for more details.

In-house/group training

If you are looking for an in-house training program or wish to send a group to an existing public program, kindly please contact Andrew Tebbutt at [email protected] or +603 2162 7802.
Learn More

For enquiries please contact:

Normariya Sariman
Account Manager, REDmoney Seminars
[email protected]
Direct Line: +603 2162 7800 ext 44

Ramesh Kalimuthu
Events Sales Director
[email protected]
Direct Line: +603 2162 7800 ext 65
Fax: +603 2162 7810

For sponsorship & speaking opportunities:

Andrew Tebbutt
Managing Director
[email protected]
Direct Line: +603 2162 7802

For marketing and media enquiries

Govina Selvanthran
Marketing Manager
[email protected]
Direct Line: +603 2162 7800 ext 22

ESG Stress Testing for Financial Institutions
A 4-part, 12-hour online program

Date: 20^th - 23^rd February 2023

6.00am - 09.00am
UK

1.00am - 1.00pm
UAE

2.00pm - 5.00pm
Singapore/KL

WHY THIS COURSE?

Course objectives:
The objective of this 12-hour programme will allow attendees to:
- Gain an understanding of what exactly is climate risk and how it affects financial institutions
- Know what climate risk disclosures are and look like
- Understand key terms and projection metrics
- Evaluate data sources and scenario generation
- Assess what modelling approaches are applicable for stress testing
- Identify the role of regulatory authorities
- Understand risk mitigation and control tools

WHO WILL BENEFIT?

Banks and finance houses
Asset & investment managers
Insurance companies
Corporate treasuries
Regulators and supervisors
Consultants and advisors

Program Format

A 12-hour online program will be delivered online through a stable, secure and free-to-access platform. The program itself will be delivered through lectures, worked examples and case studies in order to ensure a detailed and practical understanding of the program content. Participants will have plenty of opportunity to ask questions and interact with the program director. Login details and program materials will be sent to participants upon receipt of payment

Training methodology

The program is highly interactive and will encourage participation through exercises and case studies that the delegates will solve individually or in small workgroups. These activities are designed to allow delegates to practise and to consolidate the concepts that will be discussed during the lectured sessions of the program. The program will focus on the practical realities of the market, rather than taking an excessively mathematical or academic approach.

Fee

1 participant: RM4,000/$995
2 participants: RM8,000/$1,990
3 participants: RM12,000/$2,985
4 participants: RM16,000/$3,980
5 participants: RM20,500/$4,975

Discounts are available for group bookings. Please contact us for more details.

In-house/group training

If you are looking for an in-house training program or wish to send a group to an existing public program, kindly please contact Andrew Tebbutt at [email protected] or +603 2162 7802.
Learn More

AGENDA AND FORMAT

Each session will be interactive in a seminar format, with participants encouraged to engage with questions throughout.

PLATFORM

AGENDA

Part One

Session 1: Climate Risk

Differentiating between physical (acute/chronic) and transition (stranded assets) risk
Understanding the workflow: Disclosure > Scenario Analysis > Stress Testing
Modelling physical and transitional risks: Climate Biennial Exploratory Scenario (CBES) (Bank of England)
Identifying and understanding ESG window dressing: Greenwashing
Evaluating credible corporate transition plans

Case Study: What do climate risk disclosures look like?

Session 2: Projection Metrics

Carbon foot-printing
Green/brown exposure
Company engagement
Ratings and research
Scenario analysis
Impact metrics
DSCR: Debt service coverage ratio
PD: Probability of default

Part Two

Session 1: Data Sources and Quality

Working with indices: MSCI
Incorporating data from sources such as Morningstar
Model and data limitation forecasting 30-year horizons
Data granularity
Understanding data validations, reconciliations and plausibility checks

Session 2: Scenario Generation

What is scenario generation - assessing and incorporating key event criteria:
- Plausible
- Forward looking
- High severity
- Low likelihood
Overcoming bias in forecasting scenarios
Precipitation: flooding, drought, soil moisture
Effects on scenarios of sea-level rise
Effects on scenarios of temperature change: lower or higher
Effects on scenarios of wind: storms, hurricanes, typhoons and tropical cyclones

Case Study: Analysing ECB Macro-financial scenarios for the 2022 climate risk stress test

Part Three

Session 1: Climate Risk Events Case Studies

We examine several real-life case studies and assess the risk and cost of each scenario. How do they help us with scenario analysis and risk evaluation?
- 2010 Deepwater Horizon in the Mexican Gulf
- 2011 Fukushima earthquake and tsunami
- 2021 Flooding in Germany
- Conducting cost estimates for climate risk events

Session 2: Modelling Approaches

Modelling input variables
Mapping scenarios to a counterparty
Assessing counter-party level financial impacts
Checking coherence against scenario
Understanding the Bank of England Biennial Exploratory Scenario (BES)

Case Study: Working through a simplified stress test

Part Four

Session 1: Climate Governance and Regulatory Bodies

Task Force on Climate-related Financial Disclosures
UK Prudential Regulation Authority (PRA)
The Partnership for Carbon Accounting Financials (PCAF)
Science Based Targets initiative (SBTi)
Bank Negara Malaysia and Securities Commission Malaysia requirements

Session 2: Potential Risk Mitigation and Control

Compulsory precipitation and wind insurance for residential property
Flood barrier construction
Changes in the provision or pricing of key services
Potential fire sales of at-risk assets
Risk appetite re-appraisal: carbon budgets and carbon limits

EXPERT COURSE DIRECTOR

Christian Thornæs

Christian delivers training to blue chip investment and commercial banks across Europe, North America, Asia and the Middle East - ranging from specific one-off courses to complex programs designed to fit corporate strategic objectives.

Examples of programs Christian has delivered recently include:
1. Advised a major air traffic control operator how to structure payments, guarantees and funding for tender bids for contracts in countries where ECA support is a requirement.
2. Carried out an intervention for the new head of a credit structuring team at a Chinese-South African JV investment bank focusing on credit risk mitigation, covenant structure and ECA support.
3. Delivered a program to senior management of one of the major Exim banks to familiarise them with credit operations at private sector banks with whom they work actively.

Before beginning his training career, Christian worked as an investment banker and financial engineer in London and Hong Kong. His main responsibilities were to structure and sell new financial products to clients on both the issuer and the buy side. He was involved in ECA-backed transactions, including buyer and supplier credits, as well as forfaiting structures and also worked on the due diligence on the original MTS/London Thamesport financing.

Christian has an MBA from INSEAD, France as well as a BA and a M.Sc. (Econ.) from Copenhagen Business School, Denmark.