The Bank for International Settlements (BIS) and Monetary Authority of Singapore (MAS) have published a report presenting a blueprint for a platform that can be used to identify, monitor and manage climate risks in the financial system. The blueprint was developed at the BIS Innovation Hub Centre in Singapore under Project Viridis, which in January 2022 was described as a “new phase” of Project Ellipse – an initiative to help supervisors improve their data and analytical capabilities. In a joint statement, BIS and MAS said the blueprint aimed to address challenges in integrating climate risk analysis into financial stability surveillance, due to “the complex nature of climate change, notable data gaps, and limited understanding of how to measure the associated risks”. The report discusses different types of climate-related financial risks and how to manage them, as well as hurdles to integrating their analysis into risk management frameworks and financial stability monitoring. In addition, the blueprint sets out the key features and metrics required for a climate risk platform, including data and information on financed emissions, physical risk exposure, and forward-looking assessments under different climate scenarios. The climate risk platform prototypes the development of several features, including banking and financial system-wide and financial institution-level views of financed emissions, the consolidation of reported and modelled emissions of entities that are key counterparties to financial institutions, and the mapping of geographical distribution of assets to assess entities’ transition risk exposure arising from changes in carbon pricing policies and exposure to physical hazards.
The platform uses NPL techniques to gather regulatory and climate data to help supervisors identify, monitor and manage climate risks.@BIS_org @MAS_sg https://t.co/wdrz3QkbHY
— Regulation Asia (@RegulationAsia) June 13, 2024
