The Bank for International Settlements (BIS) and the Monetary Authority of Singapore (MAS) have announced the development of a blueprint for a climate risk platform aimed at financial authorities.
The blueprint of the new platform has been created at the BIS innovation hub centre in Singapore through Project Viridis.
By integrating regulatory and climate data, the climate risk platform will support financial authorities in discovering, monitoring, and managing climate risks in the financial system.
The blueprint outlines the significant features and metrics required for a climate risk platform. It includes data and information on financed emissions, exposure to physical risk, and forward-looking assessments across various climate scenarios.
The climate risk platform prototype facilitates banking and financial system-wide as well as institution-level perspectives on financed emissions. It also consolidates reported and modelled emissions of entities that are key counterparties to financial organisations.
Besides, it maps the geographical distribution of entities’ assets for evaluating transition risk exposure related to shifts in carbon pricing policies and exposure to various physical hazards.
The new climate risk platform for financial authorities will leverage technology architecture developed by the BIS Innovation Hub Singapore Centre and MAS along with other financial authorities worldwide.
MAS economics and knowledge management assistant managing director Celine Sia said: “Project Viridis is an innovative, collaborative blueprint that leverages technology solutions to systematically track climate-related data and metrices, thereby augmenting regulators’ efforts in assessing physical and transition climate risk exposures of individual banks and the financial system.”
Project Viridis illustrates the integration of regulatory data with climate data extracted from corporate disclosure documents using natural language processing techniques.
This offers authorities insights into climate-related financial risks, enabling them to form initial assessments of financial institutions’ risk exposures and identify areas that may necessitate further risk evaluation.
BIS Innovation Hub Singapore Centre head Maha El Dimachki said: “As the impact of climate change on the global financial landscape intensifies, the need for adaptive and forward-thinking strategies has never been more urgent.
“Project Viridis helps equip financial authorities with the insights needed to integrate emerging climate risks into their analysis – and thereby help promote global financial stability.”
