Introduction

As the global climate changes, financial institutions face unprecedented risks from both extreme weather events and the transition to a low-carbon economy. For mortgage portfolios, these risks are direct and tangible, affecting everything from a property’s physical integrity to its long-term market value. Implementing a robust climate stress testing framework is no longer a niche concern but a strategic imperative for managing risk and ensuring the resilience of assets. This course provides the foundational knowledge and advanced analytical tools necessary to understand, measure, and mitigate these emerging financial threats.

This comprehensive program is designed to help financial professionals build sophisticated models that integrate forward-looking climate data into traditional risk management practices. Participants will explore the intricate link between climate-related hazards and mortgage default rates, mastering the use of geospatial, meteorological, and economic data to create powerful predictive scenarios. By the end of this training, you will be equipped to develop and implement a climate stress testing framework, enabling your institution to proactively manage risk, inform capital allocation, and comply with evolving regulatory expectations.

Duration: 10 Days

Target Audience

• Financial risk analysts
• Credit risk managers
• ESG specialists
• Data scientists
• Regulatory compliance officers
• Internal and external auditors
• CFOs and other senior finance executives
• Real estate and asset managers
• Financial technology (fintech) professionals
• Investment fund managers

Objectives

• Understand the categories of climate risk.
• Learn to integrate climate data into mortgage models.
• Master scenario analysis for climate stress testing.
• Evaluate the impact of climate risk on property values.
• Develop a robust climate risk framework.
• Use quantitative tools for portfolio optimization.
• Understand the regulatory landscape for climate risk.
• Assess the impact of macroeconomic shocks 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 in Finance

• The importance of climate risk in financial reporting
• The unique challenges of digital banking
• The difference between physical and transition risks
• The role of technology in climate risk
• The impact of a changing economic environment

Module 2: Physical Risks for Mortgages

• Identifying and quantifying physical risks
• The impact of floods, wildfires, and storms
• The role of geospatial data
• The challenges of modeling localized events
• The use of data visualization tools

Module 3: Transition Risks for Mortgages

• The impact of policy and regulatory changes
• The effect of technology shifts and market dynamics
• The importance of understanding carbon pricing
• The challenges of working with future scenarios
• The use of qualitative and quantitative analysis

Module 4: Data and Analytics for Climate Risk

• 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 5: Econometric Models for Mortgage Risk

• 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 6: Machine Learning for Climate Risk

• 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 7: 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 8: The Regulatory and Legal Landscape

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

Module 9: Risk Mitigation Strategies

• The types of risk mitigation instruments
• The use of climate 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 10: 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 11: 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 12: Capstone Project Part 2: Development

• Implementing a climate stress testing model
• Using the model to evaluate a sample of mortgages
• Analyzing the model's performance on key metrics
• Building a presentation to explain the analysis
• Documenting all assumptions and data sources

Module 13: Capstone Project Part 3: Presentation

• Presenting the full analysis of the chosen mortgage 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 14: 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 climate stress testing

Module 15: 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.