Scenario Analysis and Stress Tests
Regulatory and market pressure to understand climate change’s financial implications for one’s own portfolio and to align corporate governance and risk management measures accordingly is steadily increasing.
Financial market regulators and market initiatives such as the Task Force on Climate-Related Financial Disclosures (TCFD) and the Principles for Responsible Investment (PRI) make scenario analysis and stress testing mandatory for a number of market participants and signatories.
Magnolia Consulting supports clients in taking the first steps in scenario analysis of their portfolios and in establishing its regular performance. We familiarise our clients with relevant climate and energy scenarios and enable their understanding of sector-specific drivers of opportunities and risks in order to facilitate an approximation of financial implications and appropriate portfolio management.
We primarily use publicly available sources such as the climate scenarios of the Intergovernmental Panel on Climate Change (IPCC), the central bank network Network for Greening the Financial System (NGFS), the International Energy Agency (IEA), as well as the recommendations of financial market regulators.
Depending on the needs of our clients, we also accompany the software selection process as independent consultants.