Climate scenario analysis has become a central focus for banks and financial institutions, with regulatory expectations becoming more stringent and firms required to understand and assess both short- and long-term financial risks associated with climate change.
Publication of this Phase II paper follows the development of a conceptual framework published by ISDA in 2023 to identify the main building blocks needed to develop climate risk scenarios for the trading book.
During the second half of 2023, ISDA tested the framework in collaboration with more than 30 member banks and developed three climate scenarios (physical, transition and combined). The output of this initiative includes a detailed set of scenario parameters covering a range of market risk factors, including country and sectors.
Click on the attached PDF to read the full report.
Documents (2) for Climate Scenario Analysis in the Trading Book – Phase II
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ISDA In Review – August 2026
A compendium of links to new documents, research papers, press releases and comment letters published by ISDA in August 2026.
Remove Bureaucracy from Cross-margin Approvals
Cross-margining programs play a critical role in financial markets. By ensuring margin requirements more closely reflect the actual risk of a portfolio of products, they reduce liquidity strain and improve market efficiency, both of which will become even more important...
Joint Response on CCP Resolution
On September 7, ISDA and FIA responded to a Bank of England (BOE) discussion paper on central counterparty (CCP) resolution. The associations support greater clarity on valuation capabilities prior to a crisis scenario and the boundary between recovery and resolution,...
Expanding Legal Agreement Coverage in the CDM
This paper examines the recent extension of the Common Domain Model (CDM)1 to represent two of the most significant, and previously undeveloped, areas of its legal agreement model: umbrella agreements and contract amendments. Umbrella agreements are widely used to document...