Cover Staff Climate Notes
Buy Book in Print
Approaches to Climate Risk Analysis in FSAPs
Author:
Mr. Tobias Adrian
Search for other papers by Mr. Tobias Adrian in
Current site
Google Scholar Close
https://orcid.org/0000-0001-9379-9592
,
Pierpaolo Grippa
Search for other papers by Pierpaolo Grippa in
Current site
Google Scholar Close
,
Mr. Marco Gross https://isni.org/isni/0000000404811396 International Monetary Fund

Search for other papers by Mr. Marco Gross in
Current site
Google Scholar Close
,
Mr. V. Haksar
Search for other papers by Mr. V. Haksar in
Current site
Google Scholar Close
,
Mr. Ivo Krznar
Search for other papers by Mr. Ivo Krznar in
Current site
Google Scholar Close
https://orcid.org/0000-0003-4174-0286
,
Caterina Lepore
Search for other papers by Caterina Lepore in
Current site
Google Scholar Close
,
Mr. Fabian Lipinsky
Search for other papers by Mr. Fabian Lipinsky in
Current site
Google Scholar Close
,
Ms. Hiroko Oura
Search for other papers by Ms. Hiroko Oura in
Current site
Google Scholar Close
,
Sujan Lamichhane
Search for other papers by Sujan Lamichhane in
Current site
Google Scholar Close
, and
Mr. Apostolos Panagiotopoulos
Search for other papers by Mr. Apostolos Panagiotopoulos in
Current site
Google Scholar Close
Series:
Staff Climate Notes
Volume/Issue:
Volume 2022: Issue 005
Language:
English
Publication Date:
14 Jul 2022
DOI:
https://doi.org/10.5089/9798400212895.066
ISBN:
9798400213014
ISSN:
2789-0600
Pages:
33
Keywords:
climate change; physical risk; transition risk; risk analysis; stress testing; Financial Sector Assessment Program; IMF staff Climate note; climate risk analysis; banking sector stability risk; IMF staff Climate Note 2022/005; Carbon tax; Global
Legal-disclaimer:
The IMF Notes Series aims to quickly disseminate succinct IMF analysis on critical economic issues to member countries and the broader policy community. The IMF Staff Climate Notes provide analysis related to the impact of climate change on macroeconomic and financial stability, including on mitigation, adaptation, and transition. The views expressed in IMF Staff Climate Notes are those of the author(s), although they do not necessarily represent the views of the IMF, or its Executive Board, or its management.
Download PDF (5.3 MB) Download Epub
Climate change presents risks and opportunities for the real economies and financial sectors of the IMF’s global membership. Understanding the risks is key to prepare for a successful transition to a lower carbon global economy. This will unlock the many opportunities for technological progress and structural transformation along the path that financial sectors around the world will need to adapt to and support. This note lays out the IMF staff’s emerging approach to assessing the impact of climate change on banking sector stability risks conducted in the context of the IMF’s Financial Sector Assessment Program (FSAP). The note starts with a primer on climate change risk, both transition and physical, explaining some of the technical terms and concepts used in this work. It explains the approach to standard risk analysis in FSAPs, and how this would be modified in broad terms to incorporate climate risk. The note then discusses different approaches to the analysis of physical versus transition risk, their implications for the macro-economy and across sectors in the real economy and different geographies, and how all these effects map into the banking sector. The note illustrates concepts with examples of applications from recent FSAPs and takes note of the many challenges confronting this work, including data gaps and uncertainty regarding climate projections and long simulation horizons in conducting the climate risk analysis. As such the note is focused on methods that IMF staff are deploying to raise awareness of the risks, and adaptation needs, including need for banks to develop tools to manage climate risks and for financial sector supervisory authorities to adequately supervise this risk.
  • Collapse
  • Expand
Cover Staff Climate Notes
Staff Climate Notes
Publisher:
International Monetary Fund