Climate Risk Stress Testing for Financial Institutions

Date: 21^st May 2025
Venue: DoubleTree by Hilton Kuala Lumpur

Classroom Training

COURSE INTRODUCTION

Stress testing for climate risk is challenging. First, this is a new requirement for banks, and presents a particularly steep learning curve. Second, whilst traditional stress testing is well understood, e.g., credit risk, market risk etc., the transmission channels through which climate risk impacts banks are more complicated. Even though climate risk falls into only three categories (physical risks, transition risks, and liability risks), mapping these risks to their potential impact on banks via households, firms, and the wider economy involves complex cause-and-effect linkages. Third, climate risks play out over much longer time frames than other risks. As such, their impact on bank stability has to be modelled to 2050 and beyond, which raises concerns as to the credibility and usefulness of the resulting analyses. Moreover, past data is of limited use to informing future impacts, as climate risks are increasing.

This 1-day course is intended to enable practitioners to implement climate risk stress testing (CRST) in accordance with BNM’s requirements, as currently embodied in its June 2022 discussion paper, and the more recent February 2024 methodology paper. Once passed into regulation, the CRST demands on banks in Malaysia will have to be met.

This face-to-face course explains the entire process of climate risk stress testing using the delayed transition scenario stipulated by BNM. The course makes widespread use of illustrations and numerical examples to aid understanding and provides ample opportunity for delegates to ask questions and gain important insights to immediately implement BNM’s requirements in practice.

Key Highlights and Learning Objectives:
- Learn essential methodologies for climate risk stress-testing.
- Understand techniques which translate stress-testing scenarios into their resulting impact on bank earnings, liquidity, and capital adequacy.
- Understand the requirements of Bank Negara Malaysia’s 2022 Discussion Paper on Climate Risk Stress Testing Exercise Methodology Paper, and the 2024 Methodology Paper.

Fee

Fee per participant: RM3,000/US$800

Please note that the Ringgit price is applicable to Malaysia-domiciled participants only. 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

Climate Risk Stress Testing for Financial Institutions

Date: 21^st May 2025
Venue: DoubleTree by Hilton Kuala Lumpur

Classroom Training

COURSE INTRODUCTION

Key Highlights and Learning Objectives:
- Learn essential methodologies for climate risk stress-testing.
- Understand techniques which translate stress-testing scenarios into their resulting impact on bank earnings, liquidity, and capital adequacy.
- Understand the requirements of Bank Negara Malaysia’s 2022 Discussion Paper on Climate Risk Stress Testing Exercise Methodology Paper, and the 2024 Methodology Paper.

Fee

Fee per participant: RM3,000/US$800

Please note that the Ringgit price is applicable to Malaysia-domiciled participants only. 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

Session 1: Climate Risk Stress Testing Overview

What is climate risk stress testing?
What are the main types of climate risks banks have to model?
What are the main drivers of physical risks and transition risks?
What is the “delayed transition scenario” and what does it imply?
What are the transmission channels through which physical and transition risks impact bank stability?
What type of management responses are relevant to outsized climate risks?
Are there additional capital requirements?

Session 2: CRST Process Explained in Detail

The static balance sheet approach
Key choices required for physical and transition risk scenarios
The need to focus on specific economic sectors for physical risk, e.g., agriculture
From climate risk to credit risk:
- Relating direct and indirect physical risks to financial impact
  - The case of households
  - The case of firms
- Relating transition risks to financial impact
  - The case of households
  - The case of firms
Short recap on MFRS9 for credit risk
Linking financial impact to probability of default and loss given default
Evaluating the full impact of climate risk scenarios on the bank’s future financial performance and balance sheet position
How to rationalize CRST results

Session 3: Full Numerical Illustrations

Retail credit risk exposures
Corporate credit risk exposures

Session 4: Practical CRST Implementation

Standing committees and working groups
Integrating CRST within the bank’s existing stress testing framework
Reporting CRST results
Engaging with the development of CRST regulations
Capacity building
Staying ahead of the curve

EXPERT COURSE DIRECTOR

Dr Ken Baldwin
Former MENA Regional Head of Quantitative Analysis, Citigroup

Dr. Ken Baldwin has worked as a practitioner in banking and finance for over 25 years in senior positions spanning the front and middle offices. Having graduated from Oxford University with a first-class honors degree in Physics in 1989, he qualified as a Chartered Accountant with PWC, before joining UBS, and then later Credit Suisse, in derivatives risk and control functions based in London.

He gained a PhD in microeconomics, and worked in the GCC for 15 years in retail and investment banks. Whilst at Abu Dhabi Islamic Bank, Dr. Ken built an ALM analytic technology platform capable of capturing liquidity and interest rate risks inherent in the many varied financing products used at retail and corporate levels. He then moved to take up the position of MENA Regional Head of Quantitative Analysis for Citigroup. At Citicorp, Dr. Ken worked on structuring complex derivatives products used by Gulf-regional corporations to hedge FX and interest rate risks. Still residing in Bahrain, Dr. Ken then joined Investcorp, where he worked on the risk due diligence of corporate private equity and real estate private equity transactions and portfolio management. After leaving Investcorp, he set up the risk management department for venture capital bank, providing Basel III compliance and deal analysis for the bank. He then operationalized a new Islamic investment bank as its Chief Operating Officer for 3 years, before his most recent industry role at the Islamic Development Bank, where he set up and ran a new department tasked with developing financial policies and risk-based pricing of the bank’s Islamic financing products. Dr. Ken is currently an Assistant Professor of Finance in the UK. He has published quantitative finance articles in peer-reviewed academic journals including the Journal of International Financial Markets Institutions and Money, and the Journal of Risk, and during his earlier career, taught CFA and FRM professional certifications as a pastime for the Bahrain Institute of Banking and Finance.

Who Should Attend?

This course has been designed for practitioners as well as academics. Practitioners most likely to directly benefit from the course include:
- Chief Risk Officers
- Chief Financial Officers
- Credit risk managers
- Market risk managers
- Operational risk managers
- Risk analysts
- Treasury analysts
- Credit risk officers
- Credit origination teams
- Credit portfolio managers
- Corporate bankers
- Retail bankers
- Internal auditors
- Central bankers

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*Please note there is a fee for attending this program. Please contact us for more details.

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By completing, signing and revised, sent separately us this registration form you are conﬁrming participants on the program. You are also conﬁrming your understanding of our Booking, Payment and Cancellation Policy.

Cancellation Policy: If participants cannot attend the program, replacement participants are always welcome. Otherwise, participants must notify us any of cancellations or requests to transfer to a diﬀerent program at least 14 days before the program date to be eligible for a refund, less a 5% administration on fee. Participants who cancel within 14 days of the program start date are liable to pay the full program fee and no refunds will be given. Instead fees will be converted to a REDmoney Seminars voucher equivalent to the original fee, less a 10% administration charge. This voucher is transferable within your organization and must be redeemed within one year of issue or become void. If a program is postponed for whatever reason registrations and fees will be automatically transferred to the new program date. Participants who wish to transfer to a diﬀerent program will be subject to the same terms as above and charged any diﬀerence in fees. No refunds or program vouchers will be issued for a no-show.
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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