MAS, BIS develop blueprint for climate risk platform
Regulatory, climate data will be integrated to help financial authorities identify, monitor and manage issues
THE Monetary Authority of Singapore (MAS) and the Bank for International Settlements’ (BIS) Innovation Hub have developed a blueprint for a climate risk platform to be used by financial authorities.
Known as Project Viridis, the blueprint was developed at the BIS Innovation Hub Centre in Singapore and lays out key features and metrics required for a climate risk platform.
Such features and metrics incorporate data and information on financed emissions, physical risk exposure, and forward-looking assessments under different climate scenarios.
The resultant platform will integrate regulatory and climate data to help financial authorities identify, monitor and manage climate risks in the financial system, said MAS and BIS Innovation Hub in a joint statement on Wednesday (Jun 12).
The blueprint was developed to address challenges of 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”.
“Project Viridis demonstrates how regulatory data can be integrated with climate data, which are extracted from corporate disclosure documents using natural language processing techniques,” said MAS and BIS Innovation Hub.
“This provides authorities with insights into climate-related financial risks, helping them form an initial view of financial institutions’ risk exposures, and to identify areas that may require deeper risk assessment.”
Celine Sia, assistant managing director for economics and knowledge management at MAS, viewed the blueprint as an augmentation of regulators’ efforts in assessing physical and transition climate risk exposures of individual banks and the financial system.
“This project addresses a common need of global financial authorities, and we look forward to further collaboration to expand such toolkits,” she added.
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