## Indonesia: Financial Sector Assessment Program-Technical Note on Climate Risk Assessment

_IMF Staff Country Reports, February 26, 2025_

## Source details

**Canonical URL:** [Indonesia: Financial Sector Assessment Program-Technical Note on Climate Risk Assessment](https://www.imf.org/en/publications/cr/issues/2025/02/26/indonesia-financial-sector-assessment-program-technical-note-on-climate-risk-assessment-562688)

## Other formats

- [Markdown version](/en/publications/cr/issues/2025/02/26/indonesia-financial-sector-assessment-program-technical-note-on-climate-risk-assessment-562688/index.md)
- [Structured JSON version](/en/publications/cr/issues/2025/02/26/indonesia-financial-sector-assessment-program-technical-note-on-climate-risk-assessment-562688/index.json)
- [Bundle manifest](/en/publications/cr/issues/2025/02/26/indonesia-financial-sector-assessment-program-technical-note-on-climate-risk-assessment-562688/bundle-manifest.json)

## Bibliographic details
- Published: February 26, 2025
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798229003407.002

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### Overview
- 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."

### Methodology
- Transition risk analysis:
  - Followed an integrated micro-macro approach.
  - "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."
- Physical risk analysis:
  - Assessed "acute physical risks" posed by climate change (as part of FSAP).
- Analytical limitations:
  - Uncertainty associated with scenarios and modeling approach requires cautious interpretation.

### Key findings and vulnerabilities
- Potential vulnerabilities identified from:
  - Climate-related physical risks.
  - Climate-related transition risks.
- Banking sector transmission:
  - Corporate vulnerability indicators → corporate credit risk paths → banks’ credit exposures.
- Nature of results:
  - Exploratory and subject to uncertainty.

### Policy recommendations and capacity building
- Authorities should:
  - "Further develop internal capacity and models for climate risk analysis."
  - "Improve data collection."
  - "Offer more detailed methodological guidance to financial institutions."
  - "Enhance the collaboration among government agencies on climate risk analyses."

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## Content in this bundle

- **Executive Summary**
  - [Executive Summary (Markdown version)](/-/media/files/publications/cr/2025/english/1idnea2025001-print-pdf.pdf.md){rel="alternate" type="text/markdown"}
  - [Executive Summary (PDF)](/-/media/files/publications/cr/2025/english/1idnea2025001-print-pdf.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2025/02/26/indonesia-financial-sector-assessment-program-technical-note-on-climate-risk-assessment-562688_