Climate and Nature Financial Risk
The Global Risks Alliance (GRA)
Sector-level scenarios for Climate and Nature Financial Risk are published here with their assumptions and limits. They describe aggregate exposures; they are not forecasts and not investment advice.
Bank loan book · Exercise 2
basis points, illustrative
Climate and Nature Financial Risk · Climate scenario analysisClimate scenario analysis, in outline: domain structure with placeholder names and illustrative values, not a record.
Climate and Nature Financial Risk sector scenarios are published, aggregated descriptions of how exposures in the climate and hazards field could evolve under stated assumptions, read against frameworks such as Principles for the effective management and supervision of climate-related financial risks. They describe sector-level exposures with their limits; they are not forecasts, assess no individual firm and are not investment advice.
Fig.A programme from scoping to the owner's decision. Design, not a record.
How physical and transition risk could reach a loan book under different scenarios. Illustrative design values.
Analysis runs in Nexus Foundry; reviewed releases are listed here.
| Family | Narratives | Use |
|---|---|---|
| Long-term (Phase V) | Orderly, disorderly, hot house world, too little too late | Strategy and long-horizon exposure |
| Short-term (May 2025) | Physical-only, orderly and disorderly transition, combined | Five-year financial planning and stress |
NGFS advised in December 2025 that the study behind the Phase V physical damage function had been retracted. Physical-risk results from that vintage are shown with a stated caveat and alongside hazard-based asset-level estimates, which do not depend on the macro damage function. Projections at GCRI climate projections; topic depth at scenario analysis.
Each term as this page uses it. Where a standard-setting body defines the term, the wording follows that body.
| Term | Definition |
|---|---|
| Scenario | A plausible description of how the future may unfold under stated assumptions, not a prediction. |
| Severe but plausible scenario | A disruption scenario extreme enough to test resilience yet realistic enough to occur. |
| Reverse stress test | Starting from a failure outcome and identifying the scenarios that would cause it. |
| Investment advice | A personal recommendation on investments, a regulated activity in most jurisdictions. |
The bodies and documents this page is read against. Status and editions change; each link goes to the issuing body.
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