AI and climate change are reshaping the global financial system, profoundly impacting investment strategies, risk management, compliance and customer behaviour. In the complex world of finance today, not understanding either means falling behind.
These factors highlight the fluid nature of the financial sector and its deep connections to broader global issues. To effectively manage risks and capitalize on emerging opportunities, finance professionals must stay agile and responsive to evolving trends.
Acknowledging how important these developments are, the HKUST-NYU Stern Master of Science in Global Finance (MSGF) program has launched two new courses -- AI in Finance and Climate Finance. In this article, we will hear directly from the professors, who will share their teaching approaches and explain the relevance of these subjects for today’s finance professionals.
Climate Finance
Professor Johannes Stroebel, David S. Loeb Professor of Finance at NYU Stern, will teach the Climate Finance course at MSGF.
Professor Stroebel received the 2023 Fischer Black Prize from the American Finance Association, awarded biennially to a leading financial economist under 40. He advises governments and firms on managing financial risks related to climate change. His notable roles include serving on the Climate-Related Market Risk Subcommittee at the CFTC and the Working Group on Extreme Weather and Financial Risks at PCAST. Additionally, he chairs the Academic Advisory Council at the Brookings Institution's Center on Regulation and Markets.
“In this course, we will take a very broad definition of climate finance to build a holistic understanding of the many feedback loops between climate change, the economy and financial markets.” he explains.
“One direction of this feedback loop is very clear: economic activity and carbon emissions from economic activity are key drivers of climate change. But, on the other side of that loop, climate change also affects the economy and financial markets – physical risks like wildfires, hurricanes, droughts, and floods increasingly threaten asset values and firm operations.”
Society’s response to climate change also presents risks and opportunities for firms as the world shifts towards a lower-carbon economy. These risks affect all sectors – from agriculture to energy, construction, real estate, and tourism – and are becoming increasingly significant.
“Therefore, the aim of the Climate Finance class is to build conceptual frameworks to help students think through these complex interactions and feedback loops between the economy and the physical world,” says Professor Stroebel.
Climate Change’s Multidimensional Impact
The course will start by reviewing the science behind climate change and then assess how firms across different sectors are exposed to a variety of climate risks, and how they use financial tools and different managerial approaches to address these challenges.
“We'll conduct a deep dive into the energy, real estate, and insurance sectors, because their climate risks are particularly important,” says Professor Stroebel. “But we will also consider questions such as the optimal regulation of carbon emissions. For example, should you use a carbon tax, or should you use a cap-and-trade system, and what are the differences between them?”
The course will address geopolitical risks stemming from climate change and discuss how nature and biodiversity loss relate to climate change, as well as pose distinct risks to economic activity.
Professor Stroebel concludes: “Given that climate change presents fundamental risks to the economy, it will impact nearly every aspect of the corporate, regulatory, and non-profit sectors. This class will be valuable for students with diverse career goals – whether they are directly focused on climate and sustainability or seek a better understanding of how these issues influence traditional roles in the corporate and financial sectors.”
As climate change weaves an intricate web of risks and challenges, recent breakthroughs in AI shine a light on solutions to problems that once seemed unsolvable. With AI advancing at lightning speed, should finance professionals feel intimidated or inspired?
Artificial Intelligence (AI) in Finance
Professor James Traina, Assistant Professor of Finance at NYU Stern Abu Dhabi and former economist at the Federal Reserve Bank of San Francisco, will teach the AI in Finance course for MSGF program during the recently announced Abu Dhabi module starting in 2026.
This course will cover key AI techniques in finance, exploring their implications for investment, corporate finance, and business analytics. Students will assess the value and limitations of AI tools in various financial contexts while gaining hands-on experience implementing these techniques using Python and tools like ChatGPT.
Professor Traina says: “AI has many applications across global economies, so students need to learn how and when to apply AI to remain competitive in the job market.”
However, he adds, “The course is managerial; we’re not training people to become data scientists. We want to teach people who are, or aspire to be, in managerial roles within the financial sector when and where different AI tools can be beneficial. Integrating AI into a master's program is an absolute necessity nowadays.”
When asked for examples, Professor Traina cites the use of generative AI models for forecasting and scenario analysis. The course will examine how these models simulate financial outcomes, create hypothetical scenarios, and forecast economic trends.
“For instance, over the last century, the wealth generated by stocks boils down to about 3% of companies. If you knew those 3% beforehand, you’d be a multi-billionaire.” he explains. “Identifying those 3% involves rare event estimation, and AI does that far better than our previous tools.” He also points to loan defaults. “Imagine you’re a finance manager lending out loans – 95% of the loans perform well, but 5% will default. Predicting that 5% is key, and AI does this task really well.”
AI’s Implications on the Job Market
Addressing concerns about potential job losses due to the rise of AI, Professor Traina observes that while AI is becoming ubiquitous, it primarily replaces tasks that are “not about curation, not about judgment”.
“In financial analysis, AI can gather and process data, so that in the future, analysts might only spend 10% of their time on these tasks. This frees up the other 90% for the hard, interesting work that requires human judgment, editorial decision-making and planned direction.”
Professor Traina concludes, “Not learning AI skills now is like not learning computer skills 20 years ago. In 10 years, or even in five, we’ll look back and wonder how anyone could have a job without some degree of AI skills. Through this course, I hope to teach the principles of identifying valuable opportunities and effective applications for AI.”
Conclusion
These two new courses reflect the evolving financial landscape, empowering finance professionals to excel in a world where AI and climate considerations increasingly matter. They offer frameworks, tools, and techniques for understanding and addressing the complex challenges of our interconnected global economy.
For years, MSGF has been a pioneer in global finance education, thoughtfully refining its curriculum to make sure it meets the dynamic needs of today’s financial professionals. This commitment to depth and relevance equips learners with the insights they need to succeed in an ever-changing environment.