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Exam SCR topic 1 question 19 discussion

Actual exam question from GARP's SCR
Question #: 19
Topic #: 1
[All SCR Questions]

A mid-size bank in Australia will implement scenario analysis as part of a risk assessment to measure climate risk. A risk manager in charge of this project reviews current practices among peers worldwide.
To align with common and well-established practices of financial firms, how will the risk manager implement scenario analysis to assess climate risk?

  • A. Create inclusionary criteria for investments based on climate risk
  • B. Provide ex-ante climate risk analysis to national regulators
  • C. Compare the likelihood of physical and transition risks
  • D. Examine portfolio-level exposures in various climate outcomes
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Suggested Answer: D 🗳️
by Romapretty at April 12, 2023, 1:04 a.m.

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Romapretty
Highly Voted 1 year ago
should be D. 7.5.1
upvoted 6 times
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Gs2410
Most Recent 6 months, 3 weeks ago
Selected Answer: D
Scenario Analysis has to be used to understand CLimate Risk and its impact. C can not be the answer.
upvoted 1 times
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CecileC
1 year ago
Selected Answer: C
C can't be right.
upvoted 1 times
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Dunjeon_Master
1 year ago
D seems correct, again a wrong options given as correct answer
upvoted 1 times
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sbrudersohn
1 year ago
Selected Answer: D
An important use case of scenario analysis in the financial sector is to examine portfolio-level exposures, and gauge how these would vary in different climate outcomes (i.e., scenarios)
upvoted 1 times
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Karnitschnig
1 year ago
Selected Answer: D
Scenario Analysis is used to see how the company or portfolio will do in various situations. It is not meant as a tool to gage probability of various events. Rather, we use inputs to know how likely the event is and then see the impact.
upvoted 1 times
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