Understanding climate scenarios for physical risks analysis: the technical sheet

IPCC SSPs, NGFS scenarios, short- or long-term: Analyzing the physical risk of an asset or a company requires selecting both a scenario and a time horizon, and this choice varies depending on the purpose, whether it is a stress test, a risk analysis, regulatory reporting, or due diligence.

WeeFin’s Expertise team has just published a new technical sheet to help you navigate these scenarios and select the one that fits your needs.

Fill in the form to download the technical sheet.

What you’ll find

• How climate scenarios feed the physical risk equation (hazard, exposure, vulnerability), and why they are not forecasts.
• The difference between physical and transition scenarios, and between IPCC and NGFS scenarios.
• A guide to reading the five IPCC SSP scenarios, from SSP1-1.9 to SSP5-8.5, and the seven NGFS long-term scenarios.
• The hazards to prioritise depending on the time horizon: acute events over 3-5 years, chronic effects over the long term.
• A table to select a scenario by use case (stress testing, portfolio analysis, reporting, due diligence, underwriting), with EIOPA, EBA and EFRAG recommendations.