{
  "title": "Indonesia: Financial Sector Assessment Program-Technical Note on Climate Risk Assessment",
  "publication": "IMF Staff Country Reports, February 26, 2025",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2025/02/26/indonesia-financial-sector-assessment-program-technical-note-on-climate-risk-assessment-562688",
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  "summary": "This Technical Note focuses on Critical Risk Assessment for the Indonesia Financial Sector Assessment Program (FSAP). The FSAP assessed both transition and acute physical risks posed by climate change.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Focus: Critical Risk Assessment for the Indonesia Financial Sector Assessment Program (FSAP).\n- Scope: Assessed both transition and acute physical risks posed by climate change.\n- Caution: \"The analysis and results should be regarded as exploratory and interpreted with caution given the uncertainty associated with the scenarios and modeling approach.\"\n- Highlight: \"The climate risk analysis highlights potential vulnerabilities from climate-related physical and transition risks.\""
    },
    {
      "heading": "Methodology",
      "content": "- Transition risk analysis:\n  - Followed an integrated micro-macro approach.\n  - \"Transition scenarios for various economic sectors are structurally linked to corporate vulnerability indicators and then translated into corporate credit risk paths and eventually banks’ credit exposures.\"\n- Physical risk analysis:\n  - Assessed \"acute physical risks\" posed by climate change (as part of FSAP).\n- Analytical limitations:\n  - Uncertainty associated with scenarios and modeling approach requires cautious interpretation."
    },
    {
      "heading": "Key findings and vulnerabilities",
      "content": "- Potential vulnerabilities identified from:\n  - Climate-related physical risks.\n  - Climate-related transition risks.\n- Banking sector transmission:\n  - Corporate vulnerability indicators → corporate credit risk paths → banks’ credit exposures.\n- Nature of results:\n  - Exploratory and subject to uncertainty."
    },
    {
      "heading": "Policy recommendations and capacity building",
      "content": "- Authorities should:\n  - \"Further develop internal capacity and models for climate risk analysis.\"\n  - \"Improve data collection.\"\n  - \"Offer more detailed methodological guidance to financial institutions.\"\n  - \"Enhance the collaboration among government agencies on climate risk analyses.\"\n\n---\n\n Content in this bundle\n\n- Executive Summary\n  - Executive Summary (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Executive Summary (PDF){rel=\"external\" type=\"application/pdf\"}"
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    "Published: February 26, 2025",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9798229003407.002",
    "Focus: Critical Risk Assessment for the Indonesia Financial Sector Assessment Program (FSAP).",
    "Scope: Assessed both transition and acute physical risks posed by climate change.",
    "Caution: \"The analysis and results should be regarded as exploratory and interpreted with caution given the uncertainty associated with the scenarios and modeling approach.\"",
    "Highlight: \"The climate risk analysis highlights potential vulnerabilities from climate-related physical and transition risks.\"",
    "Transition risk analysis:",
    "Physical risk analysis:",
    "Analytical limitations:",
    "Potential vulnerabilities identified from:",
    "Banking sector transmission:",
    "Nature of results:",
    "Authorities should:",
    "**Executive Summary**"
  ],
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