Risk modelling for climate-related financial disclosure
Curriculum: HYRIS
Term: 2nd year, 2nd Semester
Syllabus
CFU: 3
SSD: CEAR-01/B
Duration and Schedule: available here
Office hours: Tuesday/Thursday 10-13 AM
OBJECTIVES
By the end of the course, students will have acquired both theoretical knowledge and hands-on skills to assess, model, and disclose climate-related financial risks, and in particular they will be able to:
1. Understand the concepts of physical and transition climate risks and their implications for financial stability.
2. Apply risk modelling techniques (stochastic modelling, scenario analysis, stress testing) to climate-related financial exposures.
3. Evaluate disclosure requirements and international standards, including (Task Force on Climate-related Financial Disclosures ) TCFD and (nternational Sustainability Standards Board) ISSB guidelines.
4. Critically analyze corporate and financial institutions’ climate risk reports.
5. Design a framework for integrating climate-related risk into strategic, risk, and investment decision-making
DESCRIPTION
This course explores the intersection of climate science, risk management, and financial disclosure frameworks, with a strong emphasis on the contribution of engineers to the assessment and modelling of climate-related risks. As climate change accelerates, both physical hazards such as floods, storms, heatwaves, and sea-level rise and transition risks driven by policy, technology, and market transformations are reshaping the landscape of financial stability, corporate governance, and infrastructure resilience.
The course provides students with a comprehensive foundation in quantitative risk modelling, highlighting methods that are particularly relevant for engineers. Topics include probabilistic hazard assessment, stochastic modelling of extreme events, development of fragility and vulnerability curves, and scenario-based stress testing. These tools, traditionally applied in civil and environmental engineering, are examined within the broader framework of climate-related financial risk disclosure, particularly in line with the Task Force on Climate-related Financial Disclosures (TCFD) and the new standards issued by the International Sustainability Standards Board (ISSB).
Students will learn how to integrate engineering-based risk analysis into financial disclosure practices. Case studies will include infrastructure portfolios, urban systems, and corporate assets exposed to climate hazards, with the aim of showing how quantitative modelling informs investment strategies, regulatory compliance, and sustainable planning. The course stresses the importance of engineers as both technical specialists in hazard and vulnerability modelling and as key actors capable of translating technical risk assessments into decision-making tools for managers, policymakers, and financial stakeholders..
REQUIREMENTS
Basic knowledge of Hydrology and Probability and Statistics.
REFERENCES
EBRD. (2021). Climate risk management for financial intermediaries. European Bank for Reconstruction and Development. https://www.ebrd.com/content/
Financial Stability Board. (2017). Final report: Recommendations of the Task Force on Climate-related Financial Disclosures. Task Force on Climate-related Financial Disclosures (TCFD). https://www.fsb.org/2017/06/
Financial Stability Board. (2021). Implementing the recommendations of the Task Force on Climate-related Financial Disclosures. Task Force on Climate-related Financial Disclosures (TCFD). https://www.fsb.org/2021/10/
UNEP Finance Initiative. (2022). The climate risk landscape: Mapping climate-related financial risk assessment methodologies. United Nations Environment Programme Finance Initiative. https://www.unepfi.org/themes/
ASSESSMENT
Assignments will be handedover and graded during the course.The final examination will consist of a presentation of a study case.Students will be admitted to the final exam based on a satisfactory performance in the assignment.
Instructor 1: Mario Martina (Rector of IUSS): official webpage and CV
Institution: IUSS
E-mail: mario.martina@iusspavia.it
Voice: +39 0382 375846
Fax: +39 0382 375899
Skype: mariollv
Research area: Hydrological Risk, Stochastic Hydrology, Catastrophe Modelling