Navigating climate-related financial risks with Amalthea platform.
The New Paradigm in Financial Risk: Climate Risk
Financial institutions are now confronted with a new, formidable class of risk: Climate Risk. Prompted by both regulatory imperatives and economic incentives, banks must proactively and simultaneously manage two key dimensions—Transition Risk and Physical Risk—that can significantly impact their asset portfolios across investments, loans, trade finance, and capital markets.
A Focused Challenge for Banks: Climate Risk in the Banking Book
For banks in particular, climate risk is not a distant future consideration but an immediate factor affecting the short to medium term stability of the banking book. It is crucial that banks not only incorporate climate risk into the probability of default for borrowers, but also align with evolving regulatory frameworks. These include climate stress-tests and the evaluation of climate risk under Pillar I and II capital requirements.
Amalthea’s Solution: Robust Data-Driven Insights for Comprehensive Risk Assessment
Amalthea empowers banks to properly evaluate and navigate these complex climate-related risks. We do this by harnessing the voluminous data that banks are required to aggregate, curate, and analyze.
Cutting-Edge Innovation for Accurate Analysis
Our platform employs state-of-the-art and innovative methodologies to conduct comprehensive assessments. Whether you’re looking to run calculations on your banking book or benchmark your existing models, Amalthea provides a versatile and robust toolset for PD adjustments, scenarios impact (NGFS, IPCC, etc.) for climate stress tests or unexpected loss (capital).
Case Study: Green RWA’s Vision on Greenium
As a snapshot into how financial risk assessment is evolving, consider the visionary approach developed by Green RWA to evaluate Greenium, a metric that quantifies the ‘green’ value of an asset or investment. Their model is just one example of the forward-thinking strategies that Amalthea seeks to incorporate into its platform to ensure clients are ahead of the curve.
CERM: A complementary approach to climate stress-tests