MAS Plans to Include Climate-Related Risks into Annual Stress Tests
MAS is working toward incorporating a broader range of climate change-related risks in thematic scenarios as part of a future industry-wide stress test. This was announced, by Ong Ye Kung who is a minister in Singapore, in response to a Parliamentary Question on the plans of MAS for including climate change-related risks in the annual industry-wide stress test. MAS is also a founding member of the global Network for Greening the Financial System, which develops best practices for a more sustainable financial industry. Locally, MAS will be issuing a consultation paper on Environmental Risk Management guidelines for various financial institutions in the first quarter of this year.
MAS has already started to stress test for risks related to climate change. However, the methodologies for stress testing climate change-related risk are still at a nascent stage. BoE, as mentioned by an MP Mr. Louis Ng Kok Kwang, has acknowledged that central banks and the financial sector are still building capacity to model financial risks arising from climate change. IMF too is working to improve its climate change-related stress scenarios. MAS takes climate change-related risks seriously as a financial supervisor. Financial institutions are potentially exposed to such risks because they provide financing and insurance services to businesses that can be impacted by a wide range of climate change-related events, including natural catastrophes. There are also risks arising from changes to public policies, technologies, or consumer preferences that can impact businesses significantly. Climate change is, therefore, increasingly relevant to financial institutions, both because the risks will be on their balance sheets and because they will play a role in enabling their customers and the economy at large to make a transition in Singapore as well as abroad.
Keywords: Asia Pacific, Singapore, Banking, Insurance, Climate Change Risk, Stress Testing, NGFS, ESG, MAS
Featured Experts
Metin Epözdemir
Metin Epözdemir helps European and African banks with design and implementation of credit risk, stress testing, capital management, and credit loss accounting solutions.
Emil Lopez
Credit risk modeling advisor; IFRS 9 researcher; data quality and risk reporting manager
James Partridge
Credit analytics expert helping clients understand, develop, and implement credit models for origination, monitoring, and regulatory reporting.
Previous Article
EBA Updates List of Validation Rules and Taxonomy for ReportingRelated Articles
APRA Issues Interim Update to Policy Priorities for 2021 and Beyond
In a letter addressed to the industry, the Australian Prudential Regulation Authority (APRA) set out an updated schedule of policy priorities for the banking, insurance, and superannuation industries.
EC Adopts Solvency II and Resolution Rules Package for Insurers
The European Commission (EC) adopted a comprehensive review package of Solvency II rules in the European Union.
OCC Issues Booklets on Regulatory Reporting and Earnings
The Office of the Comptroller of the Currency (OCC) issued Versions 1.0 of the "Earnings" and "Regulatory Reporting" booklets of the Comptroller's Handbook.
ECB Sets Out Results of Economy-Wide Climate Stress Tests
The European Central Bank (ECB) published results of its economy-wide climate stress test, which aimed to assess the resilience of non-financial corporates and euro area banks to climate risks.
EBA Examines Implications of Increasing Use of Digital Platforms in EU
The European Banking Authority (EBA) published a report on the use of digital platforms in the banking and payments sector in European Union.
HKMA Issues Updates on Policy Measures Intended to Ease COVID Impact
The Hong Kong Monetary Authority (HKMA) published updates on the policy measures that were announced in context of the ongoing pandemic.
ISDA Responds to BCBS Proposal on Treatment of Cryptoasset Exposures
The International Swaps and Derivatives Association (ISDA), along with several other associations, submitted a joint response to the Basel Committee on Banking Supervision (BCBS) consultation on preliminary proposals for the prudential treatment of cryptoasset exposures.
BIS Quarterly Review Discusses Developments in Fintech and ESG Space
BIS published the September issue of the Quarterly Review, which contains special features that analyze the rapid rise in equity funding for financial technology firms, the effectiveness of policy measures in response to pandemic, and the evolution of international banking.
BCBS to Consult on Supervisory Practices for Climate Risks by Year-End
The Basel Committee for Banking Supervision (BCBS) met in September 2021 and reviewed climate-related financial risks, discussed impact of digitalization, and welcomed efforts by the International Financial Reporting Standards (IFRS) Foundation to develop a common set of sustainability reporting standards
OCC Identifies Operational Risk Deficiencies in MUFG Union Bank
The Office of the Comptroller of the Currency (OCC) issued a Cease and Desist Order against MUFG Union Bank for deficiencies in technology and operational risk governance.
