Climate scenario design shifting to be more credible granular and relevant amid recent macro geopolitical and operational shocks

Rise of short term 3 to 5 year scenarios with abrupt shocks integrating physical hazard models and macroeconomic tools

Challenge in defining counterfactuals as baselines diverge and NGFS frameworks evolve

Ad hoc sensitivity tests like NYC Local Law 97 help assess asset vulnerability compliance costs and strategies

Greater local and sector granularity such as Port Arthur TX case showing cascading market and environmental shocks

Need for stronger data governance harmonization and cross functional alignment

Embedding scenario insights into KPIs underwriting limits finance targets and enterprise risk reports

Leveraging business line insights to refine transition risk modeling

Regulatory fragmentation requires consistency without duplication while methodology gaps remain