Climate Risk Contagion of U.S. Banks
“We examine the impact of the U.S. withdrawal from the #parisagreement on the relationship between #climaterisk and #systemicrisk of #us #globalbanking. We find that after 2017, investors stopped pricing climate risk into U.S. systemic risk directly, consistent with domestic investors expecting climate risk #deregulation. However, climate risk still indirectly impacts the U.S. systemic risk through […]
Crisis Risk and Risk Management
#riskmanagement #geopoliticalrisk“The frequency of economic and #financialcrises is not increasing, but #politicalcrises can make #economiccrises more likely. The paper suggests that feedback between non-economic and economic crises can be important, but there is no comparable evidence for #climaterisk.” Lire
Climate Risk Transfer vs Risk Reduction: Do Insurance-Based Incentives Promote Investment in Adaptation to Climate Change?
#insurance #climaterisk“This paper discusses the relationship between the financial constraints faced by infrastructure assets due to #floodrisk exposure and their ability to finance adaptation to such #risks through internal resources. #risktransfer mechanisms such as #floodinsurance were shown to be a consistent channel leading to increases in #riskreduction through adaptation. “ Lire
Management Accounting Research Opportunities in Climate Change Reporting
This commentary discusses the role of #accounting in addressing #climaterisk and promoting #sustainabilityreporting. #regulators are pushing for climate risk #disclosure standards, focusing on #non_financial and forward-looking information. Lire
Climate Stress Testing
This paper that explores the design of #climate #stresstests to assess #macroprudential #risks from #climatechange in the #financialsector. The authors review current climate stress #scenarios employed by #regulators, highlighting the need to consider dynamic policy choices, better understand feedback loops between climate change and the economy, and explore compound #riskscenarios. They argue that more research is needed to identify channels through which plausible scenarios can impact credit risks, […]
Climate Risk and Canadian Banks: Is More Capital Required?
It highlights the increasing #regulatory focus on #climaterisk faced by #canada‘s #banks, both domestically through the #osfi and globally through the adoption of guidelines proposed by the #tcfd. As regulators seek to impose more #monitoring, #disclosure, and mitigation obligations on #financialinstitutions, the article raises whether banks’ #capitalrequirements should be increased to reflect the #risks associated with #climatechange. Lire
The Relationship between Climate Risk, Climate Policy Uncertainty, and Co2 Emissions: Empirical Evidence from the Us
“Shocks to disaster costs seem to decrease all type of emissions significantly and also increase renewable energy use significantly. The occurrence of natural disasters increases the political disagreement among U.S. politicians, as well as, the climate policy uncertainty, highlighting the need for efficient policymaking and regulations. ” Lire
Quantifying Uncertainty and Sensitivity in Climate Risk Assessments: Varying Hazard, Exposure and Vulnerability Modelling Choices
“We present a novel approach to quantify the uncertainty and sensitivity of risk estimates, using the CLIMADA open-source climate risk assessment platform. This work builds upon a recently developed extension of CLIMADA, which uses statistical modelling techniques to better quantify climate model ensemble uncertainty. Here, we further analyse the propagation of hazard, exposure and vulnerability […]
Analysis of New Models of Emerging Risk for Insurance Companies: The Climate Risk
“We aim to analyze strategies for assessing and managing new risks that affect the insurance industry, considering the regulatory requirements that the company must follow. To this end, the open-source software Climada was examined. This software uses stochastic forecasting models such as ARCH, GARCH, and ARIMA. Through real data obtained during an internship at E&Y, […]
Climate Risks in the U.S. Banking Sector: Evidence from Operational Losses and Extreme Storms
“… our findings provide new evidence regarding U.S. banking organizations’ exposure to climate risks with implications for risk management practices and supervisory policy.” Lire
Climate Risk, ESG Performance, and ESG Sentiment for U.S. Commercial Banks
“Climate risk is positively associated with the environmental, social, and governance (ESG) performance of banks and negatively associated with the stakeholder ESG sentiment towards them. Negative sentiment due to such exposure is associated with worse financial performance and lower stock returns, but stronger ESG performance mitigates these adverse effects.” Lire
Climate Change Risk, Risk Management and Corporate Social Responsibility: Cross CountryEvidence
“… our findings reveal that climate change uncertainty can trigger firms to invest more in CSR activities to hedge against future climate risks.” Lire
Estimating German Bank Climate Risk Exposure using the EU Emissions Trading System
” We focus on German banks and measure their exposure to climate risk using CO2 emissions reported for German firms in the European Union Emissions Trading System (EU ETS). … Overall, our approach accounts for 61.25% of the German emissions covered under the EU ETS. We document that only 19 German banks concentrate 95.88% of the total CO2 […]
Pricing of Climate Risk Insurance: Regulation and Cross-Subsidies
“… our findings question whether insurance rates can play a useful role in steering climate adaptation and whether households will have continued access to insurance.” Lire
The impact of climate transition risks on financial stability. A systemic risk approach.
“We find that default premium, yield slope and inflation are the main drivers of climate transition risk, and that, in terms of capital shortfall, the cost of rescuing more risk-exposed financial firms from climate transition losses is relatively manageable. Simulation of climate risks over a five-year period shows that disorderly transition can be expected to imply significant […]
International Political Uncertainty and Climate Risk Premium
“… we uncover the new evidence on how political uncertainty affects the riskiness of firms with high exposure to climate risk.” Lire
A Stochastic Climate Model — An approach to calibrate the Climate-Extended Risk Model (CERM)
“These parameters can be calibrated using public data. This new approach means not only to evaluate climate risks without picking any specific scenario but also allows to fill the gap between current one year approach of regulatory and economic capital models and the necessarily long-term view of climate risks by designing a framework to evaluate […]
Climate Change and Financial Systemic Risk: Evidence from Us Banks and Insurers
“We believe the results of this study can provide useful insights for the decisions of financial institutions and supervisors about the integration of climate-related risk analysis into their risk management procedures and prudential supervision practices.” Lire
Climate Change and Financial Systemic Risk: Evidence from Us Banks and Insurers
“… we investigate how financial system stability, assessed through market-based systemic risk measures (SRMs), relates to climate-induced catastrophes and to the structural change caused by the low-carbon transition.” Lire
Basel Committee consults on principles for the effective management and supervision of climate-related financial risks
“The consultation paper seeks to promote a principles-based approach to improve banks’ risk management practices and supervisory practices related to climate-related financial risks.” Lire