SCR Climate Scenario Analysis & Stress Testing Flashcards

Under TCFD recommendations, which of the following is a required disclosure element for scenario analysis?

Answer: The resilience of the organization's strategy under different climate scenarios

TCFD requires companies to disclose how resilient their strategy is under different climate scenarios, including a 2°C or lower scenario.

In SCR stress testing, 'acute physical risk' refers to which type of climate-related event?

Answer: Extreme weather events such as hurricanes, floods, and wildfires

Acute physical risks are event-driven hazards like storms and floods that cause sudden, discrete damage to assets and operations.

Which metric is most commonly used in climate stress testing to quantify a portfolio's alignment with a net-zero pathway?

Answer: Implied Temperature Rise (ITR)

Implied Temperature Rise (ITR) maps a portfolio's financed emissions trajectory to a global temperature outcome, indicating alignment with net-zero pathways.

In climate scenario analysis for the SCR exam, the 'hot house world' scenario is associated with which outcome?

Answer: Minimal climate policy action leading to 3°C or more warming and severe physical risks

The 'hot house world' scenario reflects a pathway where current policies are insufficient, resulting in warming above 3°C and intensifying physical climate hazards.

For the SCR certification, chronic physical risks include which of the following examples?

Answer: Rising sea levels and persistent drought patterns

Chronic physical risks develop gradually over time, such as rising seas, shifting precipitation, and prolonged droughts that affect long-term asset values.

Which SCR principle states that scenario analysis should be forward-looking rather than relying solely on historical loss data?

Answer: Climate risks are novel and unprecedented, making historical data insufficient for future projections

The SCR framework emphasizes that climate risk is unprecedented in scale and speed, requiring forward-looking scenarios rather than reliance on historical patterns alone.