The Bank of International Settlements (BIS) whose mission is to support central banks’ pursuit of financial stability through international cooperation has published two reports on climate-related financial risks. The two reports discuss transmission channels of climate-related risks to the banking system, and the measurement methodologies of climate-related financial risks. Climate risk drivers can be captured in traditional financial risk categories, … Read More
How should firms stress test for climate change?
Climate change creates risks to both the safety and soundness of individual firms and to the stability of the whole financial system. These are already starting to crystallise and have the potential to increase substantially in the future. The challenge for firms is considerable, and perhaps not unlike that posed by market risk and capital adequacy requirements in the 1990s. … Read More