Thank you for joining us - here is a summary of the event findings for each breakout room
Breakout Room #1
The focus over the last 12 months has been on COVID19 stress testing and the implications for the Collective Provision as well as Climate Risk stress testing.
Many challenges with stress testing climate risk including time horizons, empirical data, geographic/sector variations and technological and social developments.
Need to understand your customer and how climate risk may impact their business model and thereby risk profile.
Focus is currently on physical risk. Little development on stress testing transitional risk.
More work required to consider integrated stress tests beyond credit/counterparty risk including, funding/liquidity, negative IR and non-financial risks.
Breakout Room #2
Stress test targets the implication of performance in 2-5 years and actions to be taken.
Review the portfolio and start mapping the number one risk exposure.
Banks should be looking at how climate events are affecting businesses and the risk due to weather patterns; if situations gets worse following climate events the banks need to make a decision on whether to support the business.
The primary challenge for modelling is the data that is required (examples of data needed are: carbon footprint, regulatory pressure).
With capital management there are different COVID impacts such as social distancing and hospitality and travel in the past year; this helps to determine how to best prepare for cash flow issues.
