Conning - Conning Climate Risk Analyzer
Type of System
- Climate risk management
- Stress testing
Type of platform
What are the typical implementation costs?
Costs: Starting at USD $30,000.
How long does your software take to implement on site?
The Conning Climate Risk Analyzer™ is software-as-a-service, so no installation is required. Implementation time depends on the number of climate scenarios that the user is interested in and the complexity of the portfolio, but the range is typically between two days and two weeks.
Most recent significant update:
The Climate Risk Analyzer™ launched earlier in 2021 as one of the first commercial products available for institutional investors to quantify the potential impact of climate change on their balance sheet. The product is available as software-as-a-service, benefiting clients by providing the latest software interface with minimal IT involvement required.
The Climate Risk Analyzer™ uses stochastic asset returns to measure the potential portfolio value over the short, medium, and long-term horizon, and quantifies how the portfolio will be affected by different levels of climate stresses. Stresses may be input “through time”, showing how the different scenarios play out over the coming decades.
Planned future enhancements:
An Agile approach provides regular releases of new features:
- Introduction of standardized economic climate scenarios for multiple asset classes.
- Flexible reporting formats to meet client’s existing management reporting framework.
- Automated reporting to allow clients to analyze dozens of portfolios on a regular basis.
- Additional analytics to meet specific client use cases.
How does your solution integrate with third-party systems or in-house systems?
The Conning Climate Risk Analyzer™ can take as input stochastic scenarios or risk model output from other external systems. In this sense, the software is open and fully agnostic to the input risk models used. Output based on a specific climate scenario can be extracted and used by downstream systems.
What is the key attribute of your product(s) that differentiates it from your competitors?
Deterministic climate change stress testing provides few actionable insights into climate impacts on asset portfolios. Conning Climate Risk Analyzer™ combines stochastic projections from the GEMS® Economic Scenario Generator with the latest thinking on climate change effects within financial markets, making exploring the impact of different climate scenarios on a given asset allocation truly implementable. Functionality includes:
- Scenarios of varying severity, including an orderly transition scenario, a disorderly transition scenario, and a failed climate policy, as well as many others.
- Attribution between transition and physical risk and other risk sources.
- Exploration of the different possible timings of market impacts that a scenario may cause.
- A rich set of portfolio risk analytics, including VaR and Excess Climate Risk, as well as graphical representations of the risk through time.
The framework is designed to be flexible enough to adapt to changing regulatory requirements, and users can define custom stress tests that they consider most appropriately represent the climate risk of their holdings.
What trends are you seeing in terms of customer demand?
Insurers, pension plans and asset managers are facing increased scrutiny and pressure to understand the impact of climate risk on both sides of the balance sheet. While the concept is quite well developed on the liability side, Chief Risk Officers and the actuarial function are now also seeking to address climate risk on their asset allocations. Insurers need to understand how different climate change scenarios might affect the financial markets and their holdings over a range of time horizons. Conning’s Climate Risk Analyzer™ is one of the few tools currently available on the market that can provide insight and analysis to quantify some of these risks.
Conning’s Climate Risk Analyzer™ makes climate scenario analysis easily implementable for ORSA, PRI, TCFD and other reporting.