Simulation games for stress testing: a new approach to capacity development in financial institutions

A climate stress-test simulation game has been launched by the 2° Investing Initiative (2DII), an independent, non-profit think tank, and the SOAS Centre for Sustainable Finance. The game was developed as a capacity-building tool for financial institutions. According to the announcement: “It allows participants to walk through the different choices of environmental data, financial data, and stress-test models, simulate a combination of different approaches, and test different parameters within choices.” The development of the game was supported by Principles for Responsible Investment, a UN-supported network of investors, and Climate-KIC, an EU backed knowledge and innovation community. The enhanced version of the game is likely to involve feedback loops and systemic risks, both key factors in comprehensive stress testing.