On Thursday 8 September 2022, we hosted the Zanders Risk Management Seminar at the Muntgebouw, Utrecht.
The seminar was kicked off by Zanders’ partner and cofounder Rob Naber, followed by an introduction on measuring and managing climate risk by Professor Mathijs van Dijk of Erasmus University. It is clear that climate change will cause chronic and acute hazards to create serious financial risks, both in terms of physical risk and transitional risk. Therefore, making these risks measurable is important. However, different approaches exist, all with their advantages and disadvantages.
Van Dijk’s presentation was followed by three parallel sessions, each with its own focus. Frank Selten, weather researcher at KNMI, showed, based on various studies, that climate change is evident and will significantly increase climate risks. Climate models, based on laws of nature and improving over time, are useful tools to assess these risks.
At the same time, in another room, ING’s Sandra Schoonhoven explained what the term ESG (Environmental, Social and Governance) means and focused on the climate portion of ESG during her presentation. After identifying and assessing climate-related and environmental risks, based on quantitative and qualitative approaches, ING implemented an integrated strategic climate framework.
Meanwhile, Yulia Pashchenko of ABN AMRO elaborated on the ECB’s climate risk stress tests. The nature and severity of the scenarios used in the climate risk stress test are not comparable to adverse scenarios used in regular solvency stress tests, such as the EBA (European Banking Authority) EU-wide stress tests. The carbon price is a key difference in these scenarios. The different stress test methods, with their challenges such as data availability, were given during the presentation, along with different options banks have in this area for the future.
After a break where all participants could catch up with each other, Dirk Broeders of De Nederlandsche Bank (DNB), had us reflect on climate change and its impact on and implications for risk management. Models will not fully capture these impacts, he said. Therefore, we should emphasize scenario analysis in the form of stress tests, which should include extreme but plausible scenarios. Moreover, stress tests may not be sufficient, and we should also use reverse stress tests.
The closing session was given by Erben Wennemars. As former Olympic ice skater, he knows how to challenge yourself and push your limits. It’s never about the goal itself, but the purpose behind it. If you have that goal clearly in mind, the goal is much easier to achieve. All this wisdom can be applied to climate change risk management.
If you would like to get in touch with Zanders on Climate Risk, either for more information or to get support, please give us a call on +31 88 99 10 200 or contact us via firstname.lastname@example.org.
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Interested in climate risk?
Get in touch with Marije Wiersma or Sjoerd Blijlevens for more information about climate risk.