The financial sector is facing a new frontier of risk: climate change. The physical and transitional impacts of a changing climate are no longer distant threats but present-day drivers of financial instability that can significantly affect the value and performance of loan portfolios. This "Navigating the Storm" training course is a comprehensive program designed to equip financial professionals with the tools to identify, quantify, and manage climate-related risks within their lending activities.

Over the course of 10 days, this training will provide a robust framework for integrating climate-related data and methodologies into traditional credit risk models. You will gain a deep understanding of how physical and transitional risks can impact borrowers, and how to translate these impacts into financial metrics. By the end of this course, you will be able to build resilient loan portfolios that are prepared for the financial realities of a warming world.

Duration: 10 days

Target Audience:

• Credit Risk Managers
• Portfolio Managers
• Loan Officers
• Financial Analysts
• ESG (Environmental, Social, and Governance) Analysts
• Regulators and Supervisors
• Data Scientists in banking
• Chief Risk Officers
• Students in finance and sustainability
• Auditors and Consultants

Objectives:

• Understand the types of climate risk (physical and transitional)
• Learn to integrate climate data into credit risk models
• Develop quantitative models to assess climate-related credit risk
• Master scenario analysis for climate stress testing
• Gain insights into regulatory expectations and reporting standards
• Analyze the impact of climate policy on loan portfolios
• Identify suitable risk metrics for climate-related financial risk
• Learn to use publicly available climate data sources
• Understand the concepts of climate-adjusted Probability of Default (PD) and Loss Given Default (LGD)
• Prepare your institution for the future of sustainable finance

Course Modules:

Module 1: Foundations of Climate Risk in Finance

• The physical risks of climate change (e.g., floods, wildfires)
• The transitional risks of climate change (e.g., policy, technology)
• The financial impacts of climate risk on borrowers
• An overview of major climate-related financial disclosures
• The role of central banks and regulators

Module 2: Physical Risk Modeling

• Using geospatial data to assess physical risks
• The financial impact of extreme weather events
• Modeling chronic risks like sea-level rise and heat stress
• The importance of property-level analysis
• Case studies of physical risk events

Module 3: Transitional Risk Modeling

• Analyzing the impact of carbon taxes and regulations
• Modeling the transition to a low-carbon economy
• The role of technology disruption
• Assessing stranded assets
• The financial impact on different sectors

Module 4: Data Sources for Climate Risk

• An overview of publicly available climate data
• The role of proprietary data providers
• The importance of non-financial data
• Data-gathering techniques
• The challenges of data availability and quality

Module 5: Integrating Climate into Credit Models

• The principles of traditional credit risk modeling
• Incorporating climate factors into Probability of Default (PD)
• The impact on Loss Given Default (LGD)
• The role of climate-adjusted credit ratings
• Building a climate-sensitive credit scoring model

Module 6: Scenario Analysis and Stress Testing

• The role of climate-related scenarios
• Developing forward-looking climate stress tests
• The use of NGFS (Network for Greening the Financial System) scenarios
• The impact on capital adequacy
• Communicating stress test results

Module 7: Sector-Specific Climate Risk

• Modeling climate risk in the energy sector
• The impact on the transportation industry
• Assessing real estate portfolios
• The role of climate risk in agriculture
• The financial impact on manufacturing

Module 8: Climate Risk and Loan Pricing

• The importance of a climate-adjusted risk premium
• The role of sustainable finance products
• The impact on loan covenants
• The pricing of green loans
• The benefits of a climate-aware pricing strategy

Module 9: Regulatory Frameworks and Reporting

• An overview of TCFD (Task Force on Climate-related Financial Disclosures)
• The role of CSRD (Corporate Sustainability Reporting Directive)
• The importance of transparent reporting
• The challenges of consistent reporting
• The future of climate-related regulation

Module 10: Portfolio-Level Climate Risk

• Aggregating climate risk across a portfolio
• The role of portfolio diversification
• The impact of concentration risk
• The importance of sector-level analysis
• Building a resilient loan portfolio

Module 11: Hedging and Mitigation Strategies

• The role of financial instruments in hedging climate risk
• Strategies for portfolio-level mitigation
• The importance of active engagement with borrowers
• The role of climate insurance
• Best practices in climate risk management

Module 12: Qualitative Assessment of Climate Risk

• The importance of governance and strategy
• Assessing a borrower's climate resilience
• The role of stakeholder engagement
• The use of qualitative metrics
• The importance of a holistic approach

Module 13: The Role of Technology

• The use of machine learning for climate risk
• The role of geospatial analytics
• The benefits of cloud computing for large-scale analysis
• The use of dashboards and data visualization tools
• The future of climate risk technology

Module 14: Case Studies in Climate Risk

• Analyzing real-world examples of climate risk impacting loans
• The challenges and successes of different approaches
• The importance of continuous learning
• The role of best-in-class solutions
• The impact on financial performance

Module 15: Final Project and Presentation

• A hands-on project to build a climate risk model for a mock portfolio
• Presenting your findings and recommendations
• A discussion of remaining challenges and open questions
• The importance of a practical mindset
• The future of climate risk modeling

Training Approach

This course will be delivered by our skilled trainers who have vast knowledge and experience as expert professionals in the fields. The course is taught in English and through a mix of theory, practical activities, group discussion and case studies. Course manuals and additional training materials will be provided to the participants upon completion of the training.

Tailor-Made Course

This course can also be tailor-made to meet organization requirement. For further inquiries, please contact us on: Email: info@skillsforafrica.org, training@skillsforafrica.org  Tel: +254 702 249 449

Training Venue

The training will be held at our Skills for Africa Training Institute Training Centre. We also offer training for a group at requested location all over the world. The course fee covers the course tuition, training materials, two break refreshments, and buffet lunch.

Visa application, travel expenses, airport transfers, dinners, accommodation, insurance, and other personal expenses are catered by the participant

Certification

Participants will be issued with Skills for Africa Training Institute certificate upon completion of this course.

Airport Pickup and Accommodation

Airport pickup and accommodation is arranged upon request. For booking contact our Training Coordinator through Email: info@skillsforafrica.org, training@skillsforafrica.org  Tel: +254 702 249 449

Terms of Payment: Unless otherwise agreed between the two parties’ payment of the course fee should be done 10 working days before commencement of the training.