OakNorth pioneers climate risk analysis tool for commercial banks till 2050


OakNorth Credit Intelligence (ONci), the renowned SaaS partner for commercial banks, has announced a substantial upgrade to its ON Climate application.

This enhancement now enables users to examine transition risk and impact annually, all the way up to 2050. The ON Climate application forms an integral part of ONci’s ON Credit Intelligence Suite, offering banks an in-depth, forward-looking perspective of their commercial loan portfolios.

The software equips banks to weave scenario analysis, including climate scenarios, into their monitoring and annual review protocols. This facilitates the development of a dynamic credit culture, alleviates the expense of managing commercial portfolios, while upholding credit standards.

Transition risks, emerging from the shift towards a low-carbon economy, can be influenced by a host of factors including policy and regulatory developments related to climate, disruptive technologies, changing business models, societal preferences, or evolving frameworks and legal interpretations. ONci’s latest release will enable customers to delve into these transition risks annually till 2050, in line with the timeline suggested by the US Federal Reserve in their pilot climate scenario analysis.

This market-first update will also allow commercial lenders to align transition risk scores with loan tenures, report financed emissions trajectory annually, create emission abatement curves for TCFD reporting and comprehend transition risk-adjusted impacted financials at annual intervals for credit risk analysis.

Yugal Yadav, Senior Director of Product, Climate Change Credit Risk and Opportunities at ONci, commented, “Businesses of all sizes across the globe are facing an increasing level of climate-related risks from a growing number of extreme weather events, including floods, forest fires, and cyclones. These climate-related financial risks, including both physical and transition dangers, have the potential to dramatically impact a bank’s loan book and overall performance, while also affecting several key sectors of the economy.

“With our latest product release, banks will be able to mitigate, manage and track climate risks from this year up to 2050, while also quickly identifying sectors and borrowers that have the greatest climate risk and create effective transition strategies – helping borrowers confidently navigate the unique climate transition situations within their industry.”

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