# PortfolioCheck remediation evidence method

Status: proposed pilot methodology. It is not a Bank of Ghana rule and must be approved, calibrated and independently validated before regulatory use.

## 1. Design principle

PortfolioCheck separates four concepts:

1. **Hazard** — the physical event or chronic condition at the location. Remediation does not change this.
2. **Exposure** — the property and financial value potentially affected.
3. **Vulnerability** — the susceptibility of the property to damage.
4. **Evidence assurance** — confidence that a claimed measure exists, works and will be maintained.

Only vulnerability or loss severity can receive remediation credit. Coastal proximity, rainfall intensity, river proximity or heat remain unchanged.

## 2. Proposed evidence stages

| Stage | Assurance score | Minimum evidence |
|---|---:|---|
| Declared / planned | 0% | Asset, measure, owner and target completion date |
| Completed — documentary | 25% | Dated geotagged photographs plus invoice/completion record |
| Technically reviewed | 60% | Design/as-built record reviewed by a competent independent professional |
| Operationally verified | 85% | Site inspection/commissioning plus assigned maintenance responsibility |
| Performance verified | 100% | Measured performance or post-event evidence against a baseline |

The percentages are proposed governance parameters, not empirically derived damage reductions.

## 3. Formula

For asset \(i\), measure \(m\), hazard \(h\), and evidence stage \(s\):

\[
C^{effective}_{i,m,h}=C^{engineering}_{m,h}\times \frac{E_s}{100}
\]

where:

- \(C^{engineering}_{m,h}\) is the measure-specific engineering prior in `core/adaptation.py`;
- \(E_s\) is the evidence assurance score;
- combined measure credits are multiplicative on residual vulnerability and remain subject to the hazard cap.

The score applied in a successive return is therefore:

\[
V^{post}_{i,h}=V^{pre}_{i,h}\times \left(1-C^{combined}_{i,h}\right)
\]

No action receives credit merely because it has been entered in the remediation register.

## 4. Successive-return workflow

1. The bank records the proposed action against an asset.
2. Status progresses from planned to in progress to completed.
3. Evidence metadata and a SHA-256 fingerprint are submitted.
4. The bank includes completed measures in the next return.
5. PortfolioCheck recalculates the asset and portfolio using the accepted evidence stage.
6. The supervisor can accept, reject, expire or sample the evidence.
7. The previous return, new return, evidence decision and methodology version remain linked in the audit trail.

## 5. Governance controls required for a pilot

- Approved evidence taxonomy and competent-reviewer criteria
- Separation between the bank preparer and evidence approver
- Evidence expiry and maintenance renewal rules
- Random and risk-based supervisory sampling
- Reversal of credit when evidence expires or maintenance fails
- Versioned parameter sets and immutable submission fingerprints
- Data protection, access control and retention requirements
- Back-testing against observed damage and post-event performance

## 6. Research basis

The structure follows:

- Bank of Ghana Climate-Related Financial Risk Directive (2024): identification, monitoring, scenario analysis, physical-risk information, methodology disclosure and successive semi-annual reporting.
- Bank of Ghana ICAAP guidance: assessment of the adequacy of climate-risk mitigants.
- IFRS S2 and the IFRS Foundation’s 2025 transition-plan guidance: disclose actions, resources, targets and progress, including adaptation.
- EBA Guidelines on management of ESG risks (2025): monitor and address risk through institution plans over short, medium and long horizons.
- MDB joint methodology for adaptation finance: context of vulnerability, intent to address it, and activity linkage.
- World Bank Resilience Rating System: confidence that investments remain effective under climate risk.

These sources support evidence, monitoring and progress tracking. They do not prescribe the proposed 0/25/60/85/100 assurance parameters; those require BoG pilot approval.