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By Alberto SALICE, senior consultant, Square Management Luxembourg
Following the past financial crises, stress testing and scenario analysis in recent years has become an increasingly important part of risk management, for banks and other institutions, within the balance sheets of an individual organization. In a rapidly changing environment, climate scenario analysis evolved from being simply a ‘nice to have’ tool (or recommended as best practice) to being increasingly seen by regulators as a practice to be developed, improved, and to be rendered mandatory.
Stress test and climate scenario analysis
According to the TCFD’s recommendations (Task Force on Climate-Related Financial Disclosures), scenario...
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