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Exam SCR topic 1 question 43 discussion

Actual exam question from GARP's SCR
Question #: 43
Topic #: 1
[All SCR Questions]

A private equity fund invests in infrastructure development and agro-industrial projects. The fund hires a team of climate risk consultants to advise on investment structure and the potential climate risks to the fund. The team recommends data types and analytical tools to evaluate physical and transition risk impact at the company level.
How should the company evaluate company-level physical risk?

  • A. Calculate CVaR to offer quantitative estimates of expected financial losses or gains from climate risks and opportunities.
  • B. Develop company scores that combine proprietary methodologies with downscaled climate model data.
  • C. Measure the degree of corporate alignment to opt-in initiatives like the Transition Pathway Initiative’s Science-Based Targets.
  • D. Categorize carbon emissions as Scope 1, 2, or 3, and disclose corporate carbon footprints to data providers.
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Suggested Answer: B 🗳️
by kavvv at Sept. 24, 2023, 4:39 a.m.

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qingyang111000
5 months, 2 weeks ago
Selected Answer: B
6.5.2 Company-Level Physical Risk Data
upvoted 1 times
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Anil_SUPER_STAR
11 months, 2 weeks ago
For Physical Risk >>> B. Develop company scores that combine proprietary methodologies with downscaled climate model data.
upvoted 1 times
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mikapi22
11 months, 2 weeks ago
Imo it should be A. This is a justification for answer D in a similar question, #11, in GARP SCR 2023 official mock test: "CVaR gives a quantitative estimate of the expected financial losses or gains from climate risks and opportunities. (p. 134-135)"
upvoted 2 times
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kavvv
1 year ago
Selected Answer: A
Why not A? Standard Value at Risk is a metric for quantifying the level of financial risk in a firm, a portfolio, or a given investment. Hence cVAR includes both transition and physical risk as well as economic data and company-level data
upvoted 1 times
kavvv
1 year ago
Nvm. I just realised the ...'expected gains' which is not the function of VAR
upvoted 2 times
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