Two main areas of application of mathematics in finance are the valuation of financial instruments and the quantification of risk inherent in portfolios consisting of financial instruments. The mathematical models used in both areas were criticized in the aftermath of the financial crisis, due...

We put climate risks in the perspective of model risk using a model in the wide sense. Climate risks are systemic risks and may be clustered according to so-called volatilities, uncertainties, complexities and ambiguities (VUCA) criteria. The dominating VUCA component of climate risk is...