Introduction

As the global climate undergoes unprecedented change, the financial sector faces new and complex risks. Climate change is no longer just an environmental issue; it is a fundamental driver of credit risk, impacting everything from physical assets to transition-related policies. For financial institutions, understanding and quantifying these risks is crucial for long-term stability and resilience. The ability to model different climate scenarios and their potential effects on lending portfolios is becoming a core competency for modern risk professionals, enabling them to make informed decisions in a rapidly evolving landscape.

This comprehensive program will guide you through the intricacies of building, implementing, and validating climate scenario models for credit risk. You will learn to integrate climate data into traditional risk frameworks, analyze the physical and transition risks associated with various industries, and apply cutting-edge machine learning and econometric techniques to predict portfolio performance under different climate pathways. By the end of this training, you will be equipped to lead the development of robust, forward-looking risk management strategies that can help your organization navigate the challenges and opportunities of a low-carbon economy.

Duration: 10 Days

Target Audience

• Financial risk analysts
• Credit risk managers
• Regulatory compliance officers
• Cybersecurity professionals
• Internal and external auditors
• Legal and compliance officers
• Financial technology (fintech) professionals
• Data scientists
• Economists and researchers
• Central bank officials

Objectives

• Understand the core concepts of climate risk and its sources.
• Master the principles of a data-driven risk framework.
• Analyze the key risks in a data-driven credit ecosystem.
• Learn to build and validate advanced risk models.
• Use quantitative tools for risk detection.
• Understand the regulatory framework governing these practices.
• Develop a framework for climate scenario analysis.
• Assess the impact of climate change on a lending portfolio.
• Understand the ethical implications of financial transactions.
• Use machine learning for predictive modeling.

Course Modules

Module 1: Foundations of Climate Risk

• The importance of a transparent and fair credit risk framework
• The unique challenges of using alternative data
• The difference between traditional and algorithmic lending
• The role of technology in lending risk
• The impact of a changing economic environment

Module 2: Project Viability and Financials

• The principles of a stable financial system
• The use of internal and external data
• The role of decentralized finance (DeFi)
• The challenges of working with limited historical data
• The use of data visualization tools

Module 3: Cybersecurity Risks

• The importance of a clean and reliable dataset
• The use of internal and external data
• The role of alternative data
• The challenges of working with limited historical data
• The use of data visualization tools

Module 4: Privacy and Data Protection

• The principles of an econometric model
• The use of time series analysis and regression
• The importance of a reliable dataset
• The validation and back-testing of models
• The challenges of working with limited historical data

Module 5: Credit Risk Modeling

• The principles of a machine learning model
• The use of statistical methods and machine learning
• The importance of a reliable dataset
• The validation and back-testing of models
• The challenges of working with limited historical data

Module 6: Scenario Analysis and Stress Testing

• The concept of scenario analysis
• The role of stress testing in risk management
• The benefits for both lenders and regulators
• The importance of a robust technology platform
• The challenges of implementing these solutions

Module 7: The Regulatory and Legal Landscape

• An introduction to key financial regulations
• The role of regulators in overseeing digital banks
• The legal challenges of cross-border transactions
• The importance of a robust compliance program
• The ethical implications of financial transactions

Module 8: Risk Mitigation Strategies

• The types of risk mitigation instruments
• The use of credit insurance
• The importance of a robust risk mitigation strategy
• The challenges of implementing a dynamic risk mitigation program
• The role of derivatives in managing risk

Module 9: Portfolio Risk Management

• The concept of portfolio risk management
• The role of diversification in reducing risk
• The types of portfolio optimization techniques
• The importance of a data-driven approach
• The challenges of a rapidly changing market

Module 10: Capstone Project Part 1: Design

• Defining a specific lending portfolio for modeling
• Mapping the data requirements and model architecture
• Outlining the key technical and analytical requirements
• Creating a detailed project plan
• Presenting the design to a mock review board

Module 11: Capstone Project Part 2: Development

• Implementing a climate scenario model for a chosen asset
• Using the model to evaluate a sample of transactions
• Analyzing the model's performance on key metrics
• Building a presentation to explain the analysis
• Documenting all assumptions and data sources

Module 12: Capstone Project Part 3: Presentation

• Presenting the full analysis of the chosen lending portfolio
• Discussing the risks and benefits of the model
• Proposing a plan for model improvement
• Q&A and peer feedback session
• Receiving expert recommendations and insights

Module 13: Emerging Trends

• The use of blockchain in lending
• The role of AI in risk assessment
• The evolution of lending instruments
• The impact of new data sources on risk assessment
• The future of lending risk

Module 14: Case Studies

• A case study of a major digital bank
• A case study of a fintech's risk management
• A case study of a financial institution's regulatory challenges
• The lessons learned from past credit cycles
• The importance of a robust framework

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.