BIS and MAS unveil blueprint for climate risk platform

ESG
13/06/2024 News

The Bank for International Settlements (BIS) and the Monetary Authority of Singapore (MAS) have developed a blueprint for a platform that integrates regulatory and climate data to help financial authorities manage climate risks in the financial system. This initiative, known as Project Viridis, was developed at the BIS Innovation Hub Centre in Singapore.

Addressing the challenges of incorporating climate risk analysis into financial stability surveillance, the blueprint outlines key features and metrics needed for an effective climate risk platform. These include data on financed emissions, physical risk exposure, and forward-looking assessments under various climate scenarios.

Maha El Dimachki, Head of the BIS Innovation Hub Singapore Centre, emphasized the importance of the project: “Project Viridis is an innovative, collaborative blueprint that leverages technology solutions to systematically track climate-related data and metrics. This enhances regulators' efforts in assessing physical and transition climate risk exposures of banks and the financial system.”

Celine Sia, Assistant Managing Director (Economics & Knowledge Management) at MAS, highlighted how Project Viridis demonstrates the integration of regulatory and climate data. Using natural language processing techniques, climate data is extracted from corporate disclosure documents, providing authorities with insights into climate-related financial risks. This helps them form an initial view of financial institutions' risk exposures and identify areas needing deeper risk assessment.

As climate change increasingly impacts the global financial landscape, Project Viridis equips financial authorities with the insights necessary to integrate emerging climate risks into their analyses. This initiative promotes global financial stability by ensuring financial systems are better prepared to handle climate-related challenges.

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