Scenario Analysis8 min read

What NGFS Phase V Scenarios Change for Risk Teams

By Jonas Mohamed Osman Abdelghafour

Published 12 September 2026

How banks and insurers should interpret NGFS Phase V scenarios, known limitations and governance expectations before using the outputs in decisions.

Executive answer

NGFS Phase V remains an important common reference point, but it should be treated as a decision framework rather than a single forecast. The most useful change for risk teams is the stronger invitation to examine model limitations, scenario purpose and the consequences of assumptions before results enter capital, underwriting or strategy discussions.

What changed

The long-term scenarios connect climate policy, energy systems, macroeconomic variables and physical impacts across alternative pathways. Their value lies in consistency and comparability. They do not remove the need for institutions to decide which exposures are material, how global variables relate to local portfolios, or where public estimates may omit relevant channels.

Implications for financial institutions

Banks and insurers should document why a scenario was selected, which decisions it informs, and where supplementary analysis is required. A board paper should distinguish scenario output from management judgement and explain whether results are directional, comparative or suitable for quantified risk appetite.

Relevance to Quantica Climate Risk Model

For the Quantica Climate Risk Model, the relevant public principle is governed use: transparent scenario selection, limitations, challenge and decision ownership. The model’s internal methods remain confidential; external assurance should focus on whether conclusions are supported and appropriately qualified.

Conclusion

For what ngfs phase v scenarios change for risk teams, the practical priority is disciplined interpretation: connect authoritative evidence to a defined decision, preserve the limitations, and ensure accountable review. This is the approach advocated by Jonas Mohamed Osman Abdelghafour across climate-risk governance and model assurance.

Primary sources

NGFS Phase Vscenario analysisclimate stress testing