How can XDI help?
- Choose a stress testing approach to suit your needs
- Explore common scenarios including RCPs and NGFS
- Use our metrics as inputs to Probability of Default, Loss Given Default and Expected Credit Losses
- Avoid shortcomings of insurance-based historical loss data
- Engage our innovation teams to assist with deterministic scenarios
In this use case, XDI used statistical approaches to provide the client with damage distribution ratios and synthetic vulnerability functions which could be incorporated into its core stress testing models.
Using a series of archetypes, XDI developed a set of synthetic vulnerability functions across a range of hazards available to represent the behaviour of these archetypes when exposed to various levels of hazard severity.
XDI’s analysis enabled the client to provide specific solutions in line with the regulator’s requirements.
XDI’s analysis enabled the bank to meet obligatory stress test requirements for physical climate risk assessment.
The use of synthetic vulnerability functions allowed the bank to avoid the ‘patchiness’ of traditional, insurance-based loss data, and helped the bank establish a robust and credible baseline for future stress tests and deeper dive analyses.
The use of synthetic vulnerability functions is a powerful tool in stress testing use cases. XDI’s work in this area helps clients avoid some of the pitfalls associated with using traditional insurance loss data. The highly repeatable nature of the analysis meant the client was able to adopt XDI’s metrics as the basis for its physical climate risk appetite in each of its locations, globally.
Secure, assurable results
Delivered how you need it
By physical climate risk specialists
Asset management: Benchmark fixed income portfolios
Banking: Stress testing and scenario analysis
Asset management: Stewardship of equity and debt portfolios
Asset management: Climate resilience strategies for real asset portfolios
Banking: Reporting and disclosure
Asset finance: Due diligence
Commercial banking: Analyse your commercial property portfolio
Corporate Lending - Analyse your corporate lending portfolio
Retail banking - Analyse your residential mortgage portfolio
Our vision is not just to identify physical climate risks, but to mitigate them.
XDI can help you develop business plans for adaptation, helping you move from risk to resilience.
Talk to us today to find out more.