Assessing climate-related financial risk as part of CBES

There has been much debate over what the final guidance would look like and for those who have yet had time to familiarise themselves with the update, the BoE has asked organisations to analyse climate risk under the following criteria:

• Three scenarios; Early, Late and No Additional Action. These scenarios are not forecasts of the most likely future outcomes but rather potential future paths that could be taken by the Government and their likely impact.
• Risk Assessment for physical and transition risk. This will assess the risk to credit books, assets and liabilities and consider this risk under the following environmental change factors: 1 Warming levels. 2 Sea-level rise. 3 Benchmark Variables. 4 High-level summary statistics for a set of hazard indicators.
• Qualitative commentary capturing participant’s approaches to climate risk, their views and potential future actions.
• Counter party-level analysis for the UK’s largest firms.