Research Questions 

In the following we present some typical problems that we address in our institute:

Climate Finance. The risks arising from climate change are uniquely global, uniquely long-term, uniquely irreversible, and uniquely uncertain. Because of their complex structure and as their consequences are beyond financial losses climate risks are difficult to price. Clearly, risk that is not quantified adequately is difficult to manage effectively. 

Thus, we develop approaches to improve the analysis of climate risks within the usual risk categories (credit, market, etc.). Acknowledging the special character of climate risks,  we investigate measures to increase the resilience of companies and suggest ways to implement risk-oriented dialogues on transition plans. Also, new financial products and structures to help smooth the decarbonisation path are designed and evaluated.

Risk management in the face of climate change. 

Climate change is a source of systemic risk for financial institutions and financial markets as physical damages due to natural disasters or disruptive events due to a rapid transition can disturb key economic activities. In particular, the so-called climate insurance protection gap has to be addressed by appropriate insurance policies, alternative risk transfer or public private partnerships.

We use risks related to climate change as an archetype of systemic risks in order to highlight challenges in the current risk management process.  The non-linear feedback structure of complex systems shows the need for agile thinking in interactions in a high-dimensional world.