Ai-based portfolio stress test tool for transition risk assessment (Ai-PortStress)

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**Ai-PortStress** is an innovative approach that seeks to create dynamism in how projects get financed by operationalising transition risk. Risk implies odds, and odds imply a lack of certainty. By varying the transition risks allocated to certain aspects of a business sector and across various regions in real-time, the governments can externally influence resource allocation and the pace of transitioning to Net-Zero by 2050\. **Ai-PortStress** enables financing institutions minimise the transition risks of projects they finance by optimising the allocation of capital across a suite of projects (and/or aspects of a project) that achieve the best outcomes or least loss rates. As an innovative tool, **Ai-PortStress** ensures that financing companies can appropriately scale financing in real-time and reconstitute the execution of projects based on real-time government priorities.**Ai-PortStress** is an innovative approach that has 3 primary goals: (1) to codify transition risks by digitalising in real-time government climate-related policies through advanced natural language processing techniques; (2) to delineate projects into modular blocks with unique assets for unit assessment of transition risks; and (3) to incorporate regional factors and policies in transition risk assessments for optimal financial decision making. Specifically, its innovation lies in its ability to sequence projects into unique blocks made up of unique assets over the project timeline and query these blocks to evolve transition risks that are block-specific. **Ai-PortStress** is helpful as it empowers financiers to determine aspects of projects that they can finance based on their risk appetite. By avoiding aspects of a project that could be contentious due to incoming legislation and changes in climate policies, financial institutions limit and/or avoid the associated transition risks (carbon taxes, emission trading schemes). **Ai-PortStress** falls within the scope of this competition as it seeks to deepen climate and environmental risk assessments while integrating climate financing operations with government priorities in real-time.