Finastra & Green RWA launch new platform for climate risk management

By Gloria Methri

Finastra and Green RWA have announced the launch of the Climate-Extended Risk Model (CERM) Sandbox. The new platform offers an interactive and immersive experience for banks to understand and manage climate risks in a simple and accessible manner.

The CERM lies at the core of the Sandbox, designed to enhance financial resilience in the face of climate change. The climate risk management framework comprises two main components: physical and transition risks.

By integrating this into the existing capital framework, the solution extends the current credit risk model used by banks and provides a comprehensive approach for identifying evolving climate risks and enabling more accurate calculations of potential losses.

“By launching the CERM Sandbox, we aim to provide the finance industry with a comprehensive approach to understanding and managing climate-related financial risks at the highest level,” said Olivier Vinciguerra, Chair of Green RWA. “This is a huge achievement, in line with Green RWA’s goal to support energy transition financing, and I want to thank Finastra for its support on that journey.”

Chirine BenZaied-Bourgerie, Head of Innovation at Finastra said, “Including environmental, social, and governance (ESG) factors within risk assessments has become a board-level discussion for banks. Partnering with Green RWA is one of Finastra’s contributions toward providing the industry with tools for better climate risk management. Finastra is open by default, and we believe that open culture and technology are key to innovation and collaboration. By bringing the Sandbox to the community, we are helping the global banking industry effectively manage the impact of climate risks in their lending portfolios.”

The CERM Sandbox is accessible to all interested users, including financial institutions, policymakers, and the public.