Key takeaways from the Fed's Climate Scenario Analysis report released last week: * banks need to understand correlated risk across their CRE & RRE portfolios - under tail risk severe weather events * data enrichment - external providers can enhance property-level data * financial impact of climate risk - critical to translate into climate-adjusted PD & LGD Learn more in our guide!
Key Insights from the Fed's Climate Scenario Analysis Report The Federal Reserve asked the top 6 banks in the US (Bank of America Corporation; Citigroup Inc.; The Goldman Sachs Group, Inc; JPMorgan Chase & Co.; Morgan Stanley; and Wells Fargo Company) to participate in a climate scenario analysis exercise to learn about their climate risk-management practices and challenges and to enhance their ability to identify, estimate, monitor, and manage climate-related financial risks. The participating banks used data from both internal and external sources, including First Street data, to respond. Read our guide for key takeaways from the Fed's report and learn how First Street models enable our partners to report on physical climate risk with confidence.
Principal Consultant, Climate Changes Everything, LLC
3moThe third bullet point is the known unknown because the myriad of climate-related impacts derivative of our destabilizing ecology are not fully understood. Climate adjusted Default rates will be a function of all the cascading impacts not just the individual hazards assessed in current climate scenario analysis. This is why we cannot wait to use the traditional risk management approach of assessing how risks impact the business as the basis for prioritizing the mitigation efforts. If we concur the best scientific evidence indicates unabated increases in global average surface temperature presents existential impacts, we must do what is necessary to avoid these impacts. As with all things, why we do what we do matters.