{"product_id":"advanced-analytical-methods-for-climate-risk-and-esg-risk-management-isbn-9781394220090","title":"Advanced Analytical Methods for Climate Risk and ESG Risk Management","description":"\u003cp\u003e\u003cb\u003eA holistic view on climate risk and practical ways to model and measure it \u003c\/b\u003e \u003c\/p\u003e\u003cp\u003e\u003ci\u003eAdvanced Analytical Methods for Climate Risk and ESG Risk Management\u003c\/i\u003e provides risk management professionals and other interested parties with an introduction to climate risk, a detailed history of climate change, and analytical risk management methods. Readers will gain insight on the potential impact of climate change and learn to apply a concrete three-pronged framework for risk modelling and assessment. The management of climate risk—regardless of the size of the business or of the potential loss—is also considered in detail, with discussions of risk allocation, portfolio optimization, regulatory constraints, and sustainable goal setting. \u003c\/p\u003e\u003cp\u003eThe development of advanced risk management analytical methods for ESG and climate risk is limited. This book fills a gap by offering a comprehensive review of modelling theory and methods for addressing the accelerating changes to the planet's climate. \u003c\/p\u003e\u003cul\u003e \u003cli\u003eGain thorough background knowledge of climate science, the history of climate change, and the current political and public policy landscape\u003c\/li\u003e \u003cli\u003eUnderstand how global climate shifts introduce localized impacts to business\u003c\/li\u003e \u003cli\u003eIdentify, measure, and manage financial and operational risks\u003c\/li\u003e \u003cli\u003eUtilize a concrete methodology for stress testing portfolios and accounting for risk\u003c\/li\u003e \u003c\/ul\u003e \u003cp\u003eRisk management professionals in financial institutions, along with academics and advanced students of economics and finance, will be grateful for this comprehensive approach to climate and ESG risk. Regulators will also benefit from the thorough considerations outlined in Advanced Analytical Methods for Climate Risk and ESG Risk Management. \u003c\/p\u003e\u003cp\u003eIntroduction: Climate Risk and Environmental, Social and Governance Challenges xiii\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 1 Introduction to Climate Risk 1\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eDimensions of Climate Risk 1\u003c\/p\u003e \u003cp\u003eBasic Concepts of Climate 2\u003c\/p\u003e \u003cp\u003eCarbon Dioxide, Greenhouse Gases (GHG), and Air Pollution 5\u003c\/p\u003e \u003cp\u003eThe Science of Climate Change 6\u003c\/p\u003e \u003cp\u003eClimate Change, the Intergovernmental Panel on Climate Change (IPCC) Reports, and Social Change 10\u003c\/p\u003e \u003cp\u003eReferences 12\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 2 Forces of Nature 15\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Astronomical Theory of Climate Change 15\u003c\/p\u003e \u003cp\u003eThe Sun 24\u003c\/p\u003e \u003cp\u003eThe Earth 27\u003c\/p\u003e \u003cp\u003eAir and Wind 30\u003c\/p\u003e \u003cp\u003eWater and Ice 32\u003c\/p\u003e \u003cp\u003eThe Carbon Cycle 34\u003c\/p\u003e \u003cp\u003eNote 36\u003c\/p\u003e \u003cp\u003eReferences 36\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 3 A Brief History of Climate Change 39\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eNatural Drivers of Climate Change Over the Ages 39\u003c\/p\u003e \u003cp\u003eFrozen Earth 40\u003c\/p\u003e \u003cp\u003eWarming and Freezing Cycles and Periodic Glaciations 41\u003c\/p\u003e \u003cp\u003eThe Last Ice Age, Younger Dryas, and Climate Cycles 42\u003c\/p\u003e \u003cp\u003eClimate Change in Ancient Times 43\u003c\/p\u003e \u003cp\u003eRoman Warm Period 44\u003c\/p\u003e \u003cp\u003eThe Climate in the Dark Ages 44\u003c\/p\u003e \u003cp\u003eThe Medieval Warm Period 45\u003c\/p\u003e \u003cp\u003eThe Little Ice Age 46\u003c\/p\u003e \u003cp\u003eThe Industrial Revolution and Man-Made Effects 48\u003c\/p\u003e \u003cp\u003eToday and Tomorrow 52\u003c\/p\u003e \u003cp\u003eReferences 52\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 4 Science, Politics, and Public Policy 55\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eScience, Facts, Perception, Social Influence, Misinformation, and Fear 55\u003c\/p\u003e \u003cp\u003eBehavioral Aspects of Risk Taking and Decision Making 56\u003c\/p\u003e \u003cp\u003ePerception and Plausibility of Events 59\u003c\/p\u003e \u003cp\u003eTrust, Deception, Credibility, and Fake News 60\u003c\/p\u003e \u003cp\u003eSocial Pressure, Conformity, and Media Bias 63\u003c\/p\u003e \u003cp\u003eSocial Polarization 65\u003c\/p\u003e \u003cp\u003eOpinion Polarization under Social Pressure and Media Bias 67\u003c\/p\u003e \u003cp\u003eSocial Pressure, Media Bias, and Perception for Different Groups 70\u003c\/p\u003e \u003cp\u003eChoice Impact for Different Groups 74\u003c\/p\u003e \u003cp\u003eWhat’s Next? Tackling the Climate Change Challenge 76\u003c\/p\u003e \u003cp\u003eReferences 78\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 5 Global Shift in Response to Climate Change 81\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Shift in the Global Economy in Response to Climate Change 81\u003c\/p\u003e \u003cp\u003eTechnology Change: First Movers, Competitive Landscape, and Economic Environments 87\u003c\/p\u003e \u003cp\u003eClimate Risk Uncertainty in Competitive Business Environments 90\u003c\/p\u003e \u003cp\u003eInnovation and Product Dynamics 93\u003c\/p\u003e \u003cp\u003eProduct Adoption 95\u003c\/p\u003e \u003cp\u003eProduct Competition 98\u003c\/p\u003e \u003cp\u003eMultiple Competitor Environments 100\u003c\/p\u003e \u003cp\u003eUncertainty in Competitive Environments 103\u003c\/p\u003e \u003cp\u003eNotes 107\u003c\/p\u003e \u003cp\u003eReferences 107\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 6 Risk Management for Climate Risk and ESG 111\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eOverview, Purpose, Scope of Risk Management, and Governance 111\u003c\/p\u003e \u003cp\u003eRisk Identification, Measurement, and Management 113\u003c\/p\u003e \u003cp\u003eRegulatory Environment and Climate Risk 126\u003c\/p\u003e \u003cp\u003eOperational Readiness and Resilience for Climate-Related Effects 128\u003c\/p\u003e \u003cp\u003eRisk Monitoring and Reporting 132\u003c\/p\u003e \u003cp\u003eRisk Reporting and Analysis 133\u003c\/p\u003e \u003cp\u003eReshaping the Industry Landscape: Winners, Losers, and Synergies 135\u003c\/p\u003e \u003cp\u003eSustainability, Competitive Environment, and a Level Playing Field 138\u003c\/p\u003e \u003cp\u003eClimate-Related Financial Disclosures 138\u003c\/p\u003e \u003cp\u003eClimate Risk Financial Disclosures 143\u003c\/p\u003e \u003cp\u003eBuilding a Stress-Testing Framework for Climate Risk Using ThreeCorePillars 155\u003c\/p\u003e \u003cp\u003eReferences 161\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 7 Pillar 1: Competitive Landscape and Climate Risk Scenarios for Stress Testing 163\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eAssessing the Industry and Regulatory Landscape, Synergies, and Complexities of Competitive Business Environments 163\u003c\/p\u003e \u003cp\u003eScenarios for the Global Economy: Economic, Business, and Credit Cycles 164\u003c\/p\u003e \u003cp\u003eBusiness Cycles, Credit Supply, and Demand 171\u003c\/p\u003e \u003cp\u003eEconomic Drivers 173\u003c\/p\u003e \u003cp\u003eEconomic Activity and Credit Demand 174\u003c\/p\u003e \u003cp\u003eThe Impact of Local Economic Conditions on Global Obligors 206\u003c\/p\u003e \u003cp\u003eReferences 208\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 8 Pillar 2: Demand for Credit: Modeling Default Risk and Loss Severity 211\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eSupply and Demand for Credit: Excess Credit Demand 211\u003c\/p\u003e \u003cp\u003eAnalysis of Economic Activity 216\u003c\/p\u003e \u003cp\u003eDefining Key Concepts: Default, Loss Likelihood, and Loss Severity 217\u003c\/p\u003e \u003cp\u003eCredit Correlation 232\u003c\/p\u003e \u003cp\u003eNote 239\u003c\/p\u003e \u003cp\u003eReferences 239\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 9 Pillar 2: Demand for Credit: Risk Assessment and Credit Risk Ratings 245\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Path to Business Failure 245\u003c\/p\u003e \u003cp\u003eRisk Assessment and Credit Risk Ratings 246\u003c\/p\u003e \u003cp\u003eCredit Risk Ratings 248\u003c\/p\u003e \u003cp\u003eDefault and Loss Concepts and Risk Ratings 259\u003c\/p\u003e \u003cp\u003eDefault Rate Statistics by Rating Category 261\u003c\/p\u003e \u003cp\u003eRating Transition Matrices 264\u003c\/p\u003e \u003cp\u003eRating Transitions and the Term Structure of Default Rates 265\u003c\/p\u003e \u003cp\u003ePortfolio Risk Rating 267\u003c\/p\u003e \u003cp\u003ePortfolio Trend Rating 267\u003c\/p\u003e \u003cp\u003eRisk Management Rating 267\u003c\/p\u003e \u003cp\u003eRating Stability 270\u003c\/p\u003e \u003cp\u003eQuantifying Analysts’ Perception of Credit Risk: A Behavioral Model 271\u003c\/p\u003e \u003cp\u003eNotes 295\u003c\/p\u003e \u003cp\u003eReferences 295\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 10 Pillar 2: Demand for Credit: The Value of Financial Information 297\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Value of Financial Information: Balance Sheet, Income Statement, and Statement of Cash Flows 297\u003c\/p\u003e \u003cp\u003eThe Balance Sheet 298\u003c\/p\u003e \u003cp\u003eThe Income Statement 305\u003c\/p\u003e \u003cp\u003eThe Statement of Cash Flows 309\u003c\/p\u003e \u003cp\u003eFinancial Information and Uncertainty 313\u003c\/p\u003e \u003cp\u003eCash Liquidity and Debt Capacity 314\u003c\/p\u003e \u003cp\u003eCash Shortfall, Business Uncertainty, and Financial Distress 317\u003c\/p\u003e \u003cp\u003eNote 321\u003c\/p\u003e \u003cp\u003eReferences 321\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 11 Pillar 2: Demand for Credit: Models of Business Failure 325\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eCredit Risk Models of Business Failure 325\u003c\/p\u003e \u003cp\u003eModel Selection 329\u003c\/p\u003e \u003cp\u003eStatistical and Econometric Models 330\u003c\/p\u003e \u003cp\u003eCredit Scoring and Statistical Discriminant Analysis 333\u003c\/p\u003e \u003cp\u003eModels of Probability of Default 340\u003c\/p\u003e \u003cp\u003eNonlinear Models 343\u003c\/p\u003e \u003cp\u003eStatistical Inference and Bayesian Methods 345\u003c\/p\u003e \u003cp\u003eModel Selection Criteria: Least Squares and Likelihood Methods 347\u003c\/p\u003e \u003cp\u003eInformation Entropy Methods and Model Selection 348\u003c\/p\u003e \u003cp\u003eA Primer on Neural Networks 356\u003c\/p\u003e \u003cp\u003eValidating Statistical Models 361\u003c\/p\u003e \u003cp\u003eMeasuring Model Accuracy 361\u003c\/p\u003e \u003cp\u003eA Validation Approach for Quantitative Models 363\u003c\/p\u003e \u003cp\u003eResampling 368\u003c\/p\u003e \u003cp\u003eModel Performance and Benchmarking 368\u003c\/p\u003e \u003cp\u003eReferences 380\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 12 Pillar 2: Structural Models 383\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Role of Market Information in the Pricing of Risky Debt 383\u003c\/p\u003e \u003cp\u003eOptions Pricing, Randomness, and the Notion of Limit 386\u003c\/p\u003e \u003cp\u003eOptions Pricing and Stochastic Calculus 386\u003c\/p\u003e \u003cp\u003eIto Stochastic Integrals, Convergence, and the Notion of Limit 389\u003c\/p\u003e \u003cp\u003eHedging Portfolio Returns in the Limit vs. Hedging the Limit of Portfolio Changes 391\u003c\/p\u003e \u003cp\u003eResidual Risk and Volatility Skews 394\u003c\/p\u003e \u003cp\u003eHedging Strategies and Residual Risk 395\u003c\/p\u003e \u003cp\u003eModels and Assumptions 397\u003c\/p\u003e \u003cp\u003eAsset-Based Models and Market Uncertainty 398\u003c\/p\u003e \u003cp\u003eForward-Looking, Singular Perturbation Analysis 400\u003c\/p\u003e \u003cp\u003eMarket Uncertainty and the Valuation of Equity and Debt 408\u003c\/p\u003e \u003cp\u003eRevisiting the Default Point 412\u003c\/p\u003e \u003cp\u003eThe Role of the Company’s Borrowing Capacity 413\u003c\/p\u003e \u003cp\u003eJoint Distribution of Assets, Equity, and Debt 415\u003c\/p\u003e \u003cp\u003eUncertainty, Arbitrage, and Equity-Debt Relationship 421\u003c\/p\u003e \u003cp\u003eNotes 424\u003c\/p\u003e \u003cp\u003eReferences 424\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 13 Pillar 3: Supply of Credit: Modeling Lender’s Behavior and Business Strategies 429\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003ePortfolio Management 429\u003c\/p\u003e \u003cp\u003eEstimating Portfolio Losses 434\u003c\/p\u003e \u003cp\u003eReferences 448\u003c\/p\u003e \u003cp\u003eAcknowledgments 451\u003c\/p\u003e \u003cp\u003eAbout the Author 453\u003c\/p\u003e \u003cp\u003eIndex 455\u003c\/p\u003e  \u003cp\u003e\u003cb\u003eJORGE SOBEHART\u003c\/b\u003e has over 35 years of experience in advanced quantitative modelling in industry and government, having worked for prestigious institutions including the Atomic Energy Commission of Argentina (Nuclear Fusion Division), the Center for Nonlinear Studies at the US Los Alamos National Laboratory, Moody’s Investors Service, and CASA, a cutting-edge financial consulting start-up, making contributions in the fields of risk management, behavioral finance, theoretical and applied physics, computation and mathematical modeling. He also acted as a technical reviewer for several book editors and over a dozen professional journals in these fields. He is currently a Managing Director at a large global financial institution, leading analytics for wholesale credit and climate risk and risk ratings. During his career, he designed and developed frameworks for wholesale credit risk capital and allocation, credit and climate risk stress testing (CCAR, ICAAP, Climate Risk), credit reserves (CECL, IFRS9, FAS5), risk ratings, probability of default and various early warning tools of credit deterioration.   \u003c\/p\u003e\u003cp\u003eClimate change is one of the most recognized issues facing society today. International organizations, the scientific community, regulators, and industry groups have been conducting climate risk studies for many years. As the impact of climate change and CO2 emissions gain more visibility globally, there is an increased interest in understanding how the industry landscape will be reshaped in response to the changing physical, economic, and political environment. \u003ci\u003eAdvanced Analytical Methods for Climate Risk and ESG Risk Management: A Concrete Approach to Modeling\u003c\/i\u003e meets that interest, offering risk managers and regulators a comprehensive background on climate change, as well as a concrete method for modelling and managing the resultant risk. \u003c\/p\u003e\u003cp\u003eUniquely, this book provides readers with a thorough introduction to the concepts, scientific principles, historical events, and current political landscape pertinent to climate change and ESG concerns. In order to effectively manage climate risk professionals must understand both the principles of risk modelling and the real-world scenarios to which their models must refer. Author Jorge Sobehart, an expert in advanced quantitative modelling who has focused on issues of energy, climate, social impact, and financial risk, delivers a risk-centric analysis of how the planet got to this point, what might happen in the future, and what is being done about it on a regulatory level and within industry. \u003c\/p\u003e\u003cp\u003eAt its core, \u003ci\u003eAdvanced Analytical Methods for Climate Risk and ESG Risk Management\u003c\/i\u003e describes a fresh perspective on advanced analytical methods, risk management, and their applications within the field of climate and ESG. By employing this book’s three-pillar approach to stress testing portfolios, risk managers are assured of approaching the pressing question of climate risk with the most complete possible understanding of risk scenarios.   \u003c\/p\u003e\u003cp\u003e\u003cb\u003ePRACTICAL, QUANTITATIVE METHODS FOR ASSESSING THE POTENTIAL IMPACT OF CLIMATE RISKS\u003c\/b\u003e \u003c\/p\u003e\u003cp\u003eWritten by quantitative modelling expert Jorge Sobehart, \u003ci\u003eAdvanced Analytical Methods for Climate Risk and ESG Risk Management\u003c\/i\u003e is an essential guide for risk management professionals tasked with addressing potential losses incurred from the shifting climate of our planet. \u003c\/p\u003e\u003cp\u003eIn reading this book, you will gain a foundation of knowledge in the scientific and practical aspects of climate change, including a historical understanding that will enable you to maintain the perspective needed to soberly quantify risk. You will also find a strong framework for stress testing portfolios, estimating potential losses and reserve requirements. By employing information systems to aid in the monitoring and managing of climate risk, you can gather the data that will enable you to methodically apply risk allocation and management strategies—described in detail inside. \u003c\/p\u003e\u003cp\u003eWith \u003ci\u003eAdvanced Analytical Methods for Climate Risk and ESG Risk Management\u003c\/i\u003e, you will gain insight into the potential impact of climate change across businesses of all sizes, across industries, and across the globe. These analytical methods for risk management will lead to improved understanding of the choices and obligations present in today’s financial markets.\u003c\/p\u003e","brand":"Wiley","offers":[{"title":"Default Title","offer_id":47988663877861,"sku":"NP9781394220090","price":100.0,"currency_code":"USD","in_stock":false}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/1842\/7735\/files\/9781394220090.jpg?v=1761781172","url":"https:\/\/k12savings.com\/products\/advanced-analytical-methods-for-climate-risk-and-esg-risk-management-isbn-9781394220090","provider":"K12savings","version":"1.0","type":"link"}