The Banking Supervisory Committee specifies how climate-related financial risks are taken into consideration.

The Committee on Banking Supervision has published answers to frequently asked questions to clarify how climate-related financial risks can be taken into account in existing Pillar 1 standards.

The Committee on Banking Supervision has published answers to frequently asked questions to clarify how climate-related financial risks can be taken into account in existing Pillar 1 standards.

The document clarifies some fundamental aspects of how the future IRB models will incorporate the climate risk-related drivers.

The FAQs asked banks to consider iteratively and progressively how climate change might affect the forward-looking economic forecasts used for their internal stress testing processes. 

According to the Bank for International Settlements – BIS , banks should consider integrating climate-related financial risks into their interpretation and application of the existing Basel framework. They should also continuously develop their climate-related financial risk capabilities and expertise. 

The responses to the questions explicitly acknowledge the limitations of the data and recognise that practices will evolve iteratively over time and therefore allow for flexibility while promoting the consistent implementation of the Basel framework globally.

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