Banks are increasingly having to prepare for the risks that climate change will bring. For central banks in particular, stress tests have become integral to predicting what the future holds for their assets. Modelling climate risks allows banks to drive understanding of current and future risk from extreme events. In this pathway, Tony Hughes will discuss the macroeconomic and microeconomic risk to bank safety from climate-related risk. Professor Robert Engles Ph.D. discusses how we can construct a climate hedge portfolio and use this portfolio to stress test banks.
Watch all the videos and pass the test to obtain a certificate showing your completion of this Pathway. Certificates can be shared directly to your LinkedIn profile and social media accounts.
6 videos • 1 hour
In this video collaboration with MMF, Nobel Laureate and economist Robert Engle introduces climate financial risks - from the biggest financial shocks we have seen historically to how we measure different risk factors when they arise simultaneously. Robert then explores how we can prepare for these different scenarios using four different investor goals, all of which account for climate change.
Robert Engle • 13:01
In this video collaboration with MMF, Nobel Laureate and economist Robert Engle explores the asset pricing theory behind hedge portfolios, as well as how you would build a portfolio using either fundamental or statistical analysis.
Robert Engle • 06:14
In this video collaboration between the MMF, Grant Thornton and Finance and Sustainability Unlocked, Tony Hughes, expert risk modeller and data scientist outlines the impact of climate change on the financial system. Tony explores the risk that climate change poses to bank safety by comparing the evidence from the ECB and CBES around counterparty probabilities for default. Tony weighs up evidence at the macro-level for why climate change has so far not had a significant impact on the financial system.
In this video collaboration between the MMF, Grant Thornton, Finance and Sustainability Unlocked, Tony Hughes, expert risk modeller and data scientist outlines the link impact of climate change on the financial system. In the second video in his two-part series, Tony outlines why financial costs have been muted so far, pointing to the predictability of climate impact, that leads to closer preparedness from firms and investors.