Course overview
Climate Risk Stress Testing assesses how climate-induced disruptions may influence credit risk at the level of individual loans. Considering emerging forecasts pointing to a heightened probability of environmental tipping points, it is an essential tool for financial professionals seeking to evaluate potential threats to the resilience of the financial system under severe stress scenarios. By gaining insights into the effects of climate-related disturbances on financial stability, institutions are better equipped to pinpoint strategies that reinforce systemic robustness.
The course provides an in-depth understanding of climate scenarios and climate stress testing, along with their implications for the financial sector. Participants will explore the key factors driving climate scenario analysis within financial institutions, the main scenarios in use, and the main methods used by financial institutions to perform a climate stress testing exercise at the loan level.
The course also offers an overview of the main data available to represent climate shocks, which in the financial context are typically framed in terms of risk and fall into two primary categories. Firstly, transition risks, which stem from shifts driven by climate policy, regulation, or the broader move toward decarbonisation across sectors. And secondly, physical risks, which relate to the tangible consequences of climate change, such as extreme weather events and other environmental hazards. Physical impacts can affect collateral directly or spread indirectly through economic contagion.
Who is this course for?
This specialised online course is designed for credit risk modellers, senior risk managers, and financial professionals seeking to deepen their understanding of climate scenario analysis and climate stress testing. It will equip participants with the strategic insight and practical tools needed to integrate climate-related financial risks into credit risk models, and to guide their institutions through the growing regulatory and market expectations surrounding climate risk management.
Course format
The course is taught online over 3 modules, with a total of 6 hours of teaching. After finishing the course, participants can choose to take a multiple-choice assessment. Successfully passing this assessment will earn participants a digital badge.
What you will learn
- Overview of the main scenarios for transition risk
- Overview of the main datasets available for physical risk
- The main methodologies of stress testing (bottom up and top down)
Course presenters
Raffaella Calabrese, Professor at the University of Edinburgh Business School
Dr Calabrese works closely with financial institutions and regulators to propose analytical solutions to better measure the effects of climate change on credit risk and how to perform climate stress testing exercises. Raffaella collaborates with financial institutions, government bodies and regulators in the UK, USA, China and multiple EU countries. She provides training on Climate Stress Testing at the European Central Bank and on digital finance at the European Commission.
Joe Breeden, Chief Executive Officer at Deep Future Analytics LLC
Dr Breeden has been designing and developing risk management systems for loan portfolios since 1996. He founded Deep Future Analytics in 2011, which focuses on portfolio and loan-level forecasting solutions for pricing, account management, stress testing, CECL/IFRS9, and AI monitoring; serving banks, credit unions, and finance companies. He also serves as President of Model Risk Managers’ International Association and on the board of Upgrade. Dr Breeden earned a PhD in Physics and published over 90 academic articles, 8 patients, and 6 books.
Why the University of Edinburgh Business School
The University of Edinburgh is a world top 30 University. Ranked 2nd in the UK and 7th in the world for sustainability (QS World University Rankings 2025), we are a trusted partner in climate and sustainability education.
Within the Business School, our Centre for Business, Climate Change and Sustainability comprises over 30 academics focused on the intersection between climate, finance, and business. We provide advice to governments and regulators around the world to shape policy of the future. We work with businesses of all sizes, multilateral organisations such as the UN, World Bank and European Commission, and international NGOs.
Through our Executive Education programmes we translate our expertise into action, positioning business at the forefront of critical thinking, good decision-making, and practical work on climate and sustainability.
Get in touch
If you’re interested in our Climate Stress Testing course, please contact us:
Raffaella Calabrese, Professor of Statistics and Data Science
Raffaella.calabrese@ed.ac.uk
Elspeth Wray, Climate and Sustainability Portfolio Manager
elspeth.wray@ed.ac.uk