Risk Management

Towards a Faceted Taxonomy of Financial Services

Reading Time: 27 min.
Who Needs a New Financial Services Taxonomy? Our age is increasingly dominated by the dual challenges and opportunities of the sustainability transition on the one hand, and digital transformation on the other. We witness emerging new financial domains with novel names such as Fintech , or TechFin, or various combinations and hues of Green and Sustainable in Sustainable Finance and we see forces that are reshaping the direction of travel for the financial industry.
Climate Dictionary Quiz

Climate Dictionary Quiz

The Climate Dictionary Quiz is now accessible as a course at the Open Risk Academy. The Quiz is based on the UN Climate Dictionary and provides an interactive educational tool to enable deeper understanding of the essential terminology.

Reading Time: 1 min.
The Climate Dictionary is an initiative of the United Nations Development Programme (UNDP) aimed at providing people worldwide with a simplified guide to understand climate change. The Dictionary (first published Aug 2023) seeks to bridge the gap between complex scientific jargon such as present in the IPCC publications and other scientific bodies and the public. Image: NASA Temperature Anomaly The Dictionary selects several dozen important climate concepts that are currently actively discussed worldwide with the aim to make them more accessible and relatable to individuals from various backgrounds and levels of expertise.
Equinox 0.7 release focuses on scope 2 (electricity) emissions

Equinox 0.7 release focuses on scope 2 (electricity) emissions

New data models introduced in this release of Equinox cater to the requirement of integrating energy attribute certificate information into the portfolio database.

Reading Time: 3 min.
GHG Accounting offers a means of measuring the direct and indirect emissions to the Earth’s Biosphere of CO2 and its equivalent gases from industrial and other activities. GHG Accounting is a rapidly developing area that has come to receive increased focus in the context of accelerating Climate Change. Given that the generation of electricity and heat accounts for around a third of global GHG emissions electricity consumers have incentives to proactively reduce those emissions by reducing electricity demand, or by shifting energy supply by procuring alternative lower-carbon or renewable resources.
White Paper 13, Techniques for Federated Analysis

White Paper 13, Techniques for Federated Analysis

Reading Time: 1 min.
Open Risk White Paper 13: Federated Credit Systems, Part II: Techniques for Federated Data Analysis In this Open Risk White Paper, the second of series focusing on Federated Credit Systems, we explore techniques for federated credit data analysis. Building on the first paper where we outlined the overall architecture, essential actors and information flows underlying various business models of credit provision, in this step we focus on the enabling arrangements and techniques for building Federated Credit Data Systems and enabling Federated Analysis.
EU Datathon 2022 preselection for the Equinox platform

EU Datathon 2022 preselection for the Equinox platform

We are very happy to announce that our EU Datathon 2022 proposal based on the equinox platform has been pre-selected to enter the formal stage of the competition

Reading Time: 2 min.
What is the EU Datathon? The EU Datathon is an annual Open Data competition organised by the Publications Office of the European Union since 2017. The competitions are organised to create new value for citizens through innovation and promoting the use of open data, in particular the datasets available on the official portal for European data. Every year, EU Datathon calls for innovators from around the world to come up with new ways of using open data to address important societal and environmental challenges, with the condition that they use at least one of the thousands of data sets published on data.
Equinox 0.4 release focuses on green public procurement functionality

Equinox 0.4 release focuses on green public procurement functionality

On Earth Day 2022 we are happy to release a significant update of Equinox, the open source platform supporting sustainable portfolio management

Reading Time: 1 min.
Equinox 0.4 Release Equinox is an open source platform that supports holistic risk management and reporting in the context of Sustainable Portfolio Management. The platform integrates geospatial information with applicable regulatory and industry standards, for example the GHG Protocol (accounting for Project based, Corporate and City-Wide greenhouse gas emissions), the IPCC Emissions Factor database and further reference data, the PCAF attribution methodologies (and more) to provide a holistic view of the footprint of both individual projects and portfolios.
Integrating the IPCC Emissions Factors Database Into Equinox

Integrating the IPCC Emissions Factors Database Into Equinox

In the latest update of the Equinox Project we discuss the integration of reference data an in particular greenhouse gas emissions factors as catalogued in the IPCC Emissions Factors database (EFDB).

Reading Time: 2 min.
Equinox is an open source platform that supports the holistic risk management and reporting of major sustainable finance projects (the financing of projects with material physical footprint) such as project finance. Equinox aims to integrate in the database a number reference databases that facilitate tasks of sustainable portfolio management. In the current focus such reference material concerns the emissions factors for various processes and activities. In the latest (Solstice Day!) update of the Equinox Project we discuss the integration of reference data an in particular greenhouse gas emissions factors as catalogued in the IPCC Emissions Factors database (EFDB).
Open Risk White Paper: Sustainable Portfolio Management - Attribution and Allocation of Greenhouse Gas Emissions

Open Risk White Paper: Sustainable Portfolio Management - Attribution and Allocation of Greenhouse Gas Emissions

We develop an analytic framework that synthesizes current approaches to sustainable portfolio management in the context of addressing climate change. We discuss the different required information layers, approaches to emissions accounting, attribution and forward-looking limit frameworks implementing carbon budget constraints.

Reading Time: 3 min.
The frontpage graphic is adapted from Steffen et al. “Planetary Boundaries: Guiding human development on a changing planet”. Science (2015). The Planetary Boundaries concept was proposed in 2009 by this group of Earth system and environmental scientists. The group suggested that finding a “safe operating space for humanity” is a precondition for sustainable development. The framework is based on scientific evidence that human actions since the Industrial Revolution have become the main driver of global environmental change.
White Paper 11, Sustainable Portfolio Management of GHG

White Paper 11, Sustainable Portfolio Management of GHG

Reading Time: 0 min.
Open Risk White Paper 11: Sustainable Portfolio Management: Attribution and Allocation of Greenhouse Gas Emissions We develop an analytic framework that synthesizes current approaches to sustainable portfolio management in the context of addressing climate change. We discuss the different required information layers, approaches to emissions accounting, attribution and forward-looking limit frameworks implementing carbon budget constraints. Download Download OpenRiskWP11_021221 Citation @ARTICLE{OpenRiskWhitePaper11, author = {P. Papadopoulos}, year = {2021}, note = {\href{https://www.
Sustainability Is Not a Point It Is a Surface of Possibilities

Sustainability Is Not a Point It Is a Surface of Possibilities

Sustainability is frequently depicted as an emissions curve to bend, or a temperature threshold not to exceed. A useful visual model is to see sustainability as a surface of possibilities. Achieving environmental objectives still allows widely differing choices that may not all be equally desirable.

Reading Time: 8 min.
Bending the Curve - Sustainability Conceptualized as a One Dimensional Exercise The opening of the Global Scenario Group report “Bending the Curve: Toward Global Sustainability” by Paul Raskin, Gilberto Gallopin, Pablo Gutman, Al Hammond and Rob Swart, published in 1998 goes as follows: Over the last few centuries, a mere heartbeat of historic time, humanity has moved to the brink of a new evolutionary milestone - the planetary phase of civilization.
Offline Availability of Open Risk Manual Content

Offline Availability of Open Risk Manual Content

In this post we explore some offline availability options that are relevant for Open Risk projects and some first steps in this direction

Reading Time: 3 min.
Offline versus Online In computer technology and telecommunications, online indicates a state of connectivity over digital networks, and offline indicates a disconnected state. Both states have many sub-divisions. For example the type online access varies enormously according to the bandwidth and latency of connections. Similarly, people may be “offline” as not having network access or completely unplugged, as in not having access or using any electronic device. While the number of people, the fraction of time and the type of activities they engage on has rapidly expanded as digital technology increasingly diffuses, the online state is certainly not the default state and in many regions or population segment might be completely out of reach.
List of Commonly Conflated Financial Terms

List of Commonly Conflated Financial Terms

In this blog post we discuss a number of financial terms whose precise meaning is frequently intentionally or unintentionally obscured. As a result those terms may, like a Rorschach Blot, mean different things to different people. Unlike this famous psychological test, ambiguity in weighty financial matters can have adverse consequences.

Reading Time: 13 min.
According to wikipedia Conflation is the merging of two or more sets of information, texts, ideas, opinions, etc., into one, often in error. This may lead to misunderstandings, as the fusion of distinct subjects might obscure analysis of relationships which are emphasized by contrasts. Why does conflation happen in the first place? There are several possible factors which in some contexts may be co-existing and overlapping: gratuitous (over)simplification driven by laziness or habit literacy gaps in either the originator or the receiver of information an objective to frame, mislead or otherwise be economical with the truth In this blog post we discuss a number of interrelated financial terms whose precise meaning is frequently intentionally or unintentionally obscured.
White Paper 10, Concentration, diversity in economic networks

White Paper 10, Concentration, diversity in economic networks

Reading Time: 1 min.
Open Risk White Paper 10: Connecting the Dots: Concentration, diversity, inequality and sparsity in economic networks In this second Open Risk White Paper on Connecting the Dots we examine measures of concentration, diversity, inequality and sparsity in the context of economic systems represented as network (graph) structures. We adopt a stylized description of economies as property graphs and illustrate how relevant concepts can be represented in this language. We explore in some detail data types representing economic network data and their statistical nature which is critical in their use in concentration analysis.
Introduction to the EBA NPL Templates

Introduction to the EBA NPL Templates

Reading Time: 3 min.
Summary The Open Risk Academy course NPL270672 is a CrashCourse introducing the EBA NPL Templates. Content We start with the motivation for the templates and the domain of credit data (to which NPL data belongs). We discuss three core classes that capture the essence of lending operations from a lenders point of view (Counterparty, Loan, Collateral). Next we explore classes that capture events in the lending relationship lifecycle (which we term NPL Scenarios).
Equinox: a Platform for Sustainable Project Finance Risk Management

Equinox: a Platform for Sustainable Project Finance Risk Management

On Earth Day 2021 we are happy to launch Equinox, an open source platform supporting sustainable project finance

Reading Time: 5 min.
Equinox is an open source platform that supports holistic risk management and reporting of Sustainable Finance (Sustainable Portfolio Management). The platform integrates geospatial information with applicable regulatory and industry standards from EBA, PCAF and Equator Principles to provide a holistic view of the footprint of both individual projects and portfolios, in particular of project finance investments. Motivation Sustainability (understood in environmental, economic and social terms) is emerging as an undisputed constraint that will shape future human activity and more specifically how the financial system facilitates and empowers economic life.
Marking Pi Day 2021 With a Raspberry Pi Docker Image for OpenNPL

Marking Pi Day 2021 With a Raspberry Pi Docker Image for OpenNPL

We celebrate Pi Day 2021 releasing an ARM version of the openNPL platform that is suitable for the Raspberry Pi

Reading Time: 2 min.
Celebrating Pi Day 2021 Pi Day is celebrated every year on March 14th. The reason of course is that the day is denoted in some calendars as (3/14), which evokes of 3.14, the first three digits of “π”. A thin excuse maybe but sufficient for the true believers to join along! The occasion represents an annual opportunity for mathematics and science enthusiasts to recite the infinite charms of Pi, including its irrationality, to talk to friends and family about math and its uses, and, when everything else fails, simply eat pie.
Stress Testing of the Future - A view from 2031

Stress Testing of the Future - A view from 2031

What is the future of stress testing? We speculate on how stress testing might look like in 2031

Reading Time: 13 min.
What is the future of stress testing? To speculate on the future of Stress Testing we need first a basic definition what stress testing is. Broadly speaking, the goal of Stress Testing is to assess how a system would behave under adverse conditions that - while not the most likely outcome with the knowledge of today - are within the realm of the plausible. There are, broadly speaking, two types of stress testing: The Real stress testing version and Hypothetical stress testing version.
Taxonomy of Uncertainty

Taxonomy of Uncertainty

We review and synthesize into a taxonomy a number of related concepts and terms describing uncertainty, risk, randomness and model risk

Reading Time: 14 min.
Risk, Randomness, Uncertainty and other Ambiguous Terms Uncertainty versus Risk is a popular discussion topic among risk managers, especially after major risk management disasters. The debate can get really hairy and drift into deep philosophical areas about the nature of knowledge etc. Yet the significance of having an as clear as possible language toolkit around these terms should not be underestimated. Practical risk management typically shuns too deep excursions into the meaning of things, yet that is not quite compatible with the use of sophisticated methods and tools (such as a Risk Model ) that assumes an understanding of the scope and limitations of “knowledge”.
openNPL 0.2 REST API implementation

openNPL 0.2 REST API implementation

The 0.2 release of openNPL exposes a RESTful API that provides easy standardized online access to NPL credit portfolio data conforming to the EBA NPL templates

Reading Time: 4 min.
openNPL 0.2 release The open source openNPL platform supports the management of standardized credit portfolio data for non-performing loans. In this respect it implements the detailed European Banking Authority NPL loan templates. openNPL aims to be at the same time easy to integrate in human workflows (using a familiar web interface) and integrate into automated (computer driven) workflows. The latest (0.2) release exposes a REST API that offers machine oriented access using, what is by now, the most established mechanism for achieving flexible online data transfers.
openNPL now Available in Dockerized Form

openNPL now Available in Dockerized Form

Open Source, cloud based management of Non-Performing Loan data following the European Banking Authority's templates with just a few keystrokes!

Reading Time: 1 min.
openNPL now Available in Dockerized Form Following up on the first release of openNPL the platform is now available to install using Docker. Running openNPL via docker is the installation option that simplifies the manual process (but a working docker installation is required!). Docker Hub You can pull the latest openNPL image from Docker Hub (This method is recommended if you do not want to mess with the source distribution).