We all know about modelling the impact of market prices, fx and interest rates – but what about the climate?

A new idea from Razor Risk is to provide firms with a structured framework for modelling the impacts of climate change within a statistical framework.

The approach is to use a bayesian network to analyse experts opinions on the pathways for climate change. This leads to analytical scenarios for various policy actions over a 30 year time horizon. Firms will be able to map these pathways to business sensitivities and explore a variety of variables to stress test their future business models.

The full details of this climate modelling approach can be read at the Razor Risk website.