{
  "title": "Approaches to Climate Risk Analysis in FSAPs",
  "publication": "Staff Climate Notes, July 14, 2022",
  "sourceUrl": "https://www.imf.org/en/publications/staff-climate-notes/issues/2022/07/12/approaches-to-climate-risk-analysis-in-fsaps-519515",
  "canonical": "https://www.imf.org/en/publications/staff-climate-notes/issues/2022/07/12/approaches-to-climate-risk-analysis-in-fsaps-519515",
  "overlayPath": "/en/publications/staff-climate-notes/issues/2022/07/12/approaches-to-climate-risk-analysis-in-fsaps-519515/index.md",
  "summary": "Climate change presents risks and opportunities for the real economies and financial sectors of the IMF’s global membership. Understanding the risks is key to prepare for a successful transition to a lower carbon global economy.",
  "sections": [
    {
      "heading": "Core objective and framing",
      "content": "- Sets out the IMF staff’s emerging approach to assessing the impact of climate change on banking sector stability risks within the Financial Sector Assessment Program (FSAP).\n- Emphasizes that understanding climate risks is key to preparing for a successful transition to a lower carbon global economy and unlocking opportunities from technological progress and structural transformation.\n- Focuses on methods IMF staff are deploying to raise awareness of risks and adaptation needs, including:\n  - need for banks to develop tools to manage climate risks, and\n  - need for financial sector supervisory authorities to adequately supervise climate-related risks."
    },
    {
      "heading": "Primer on climate risk (terminology and concepts)",
      "content": "- Distinguishes two principal categories of climate risk:\n  - transition risk\n  - physical risk\n- Explains technical terms and concepts used in climate risk analysis relevant for FSAP work."
    },
    {
      "heading": "Modifying standard FSAP risk analysis to incorporate climate risk",
      "content": "- Describes how the standard risk analysis framework used in FSAPs would be modified in broad terms to integrate climate risk considerations.\n- Highlights mapping channels from macroeconomic and real-economy effects into banking sector stability risks."
    },
    {
      "heading": "Approaches to analyzing physical versus transition risk",
      "content": "- Discusses different analytical approaches for:\n  - physical risk: impacts across sectors, geographies, and implications for the macro-economy\n  - transition risk: policy, technology, and market-driven changes during decarbonization pathways\n- Explains how effects on the macro-economy and real sectors vary by sector and geography, and how these heterogenous effects feed into bank exposures and stability assessments."
    },
    {
      "heading": "Mapping to banking sector and stress testing",
      "content": "- Illustrates how physical and transition risks map into banking sector stability risk assessments undertaken in FSAPs.\n- Positions stress testing and scenario analysis as central tools for quantifying potential impacts on bank portfolios and system-wide stability."
    },
    {
      "heading": "Illustrative applications and examples",
      "content": "- Provides examples from recent FSAPs to illustrate key concepts and methodological choices used in practice."
    },
    {
      "heading": "Challenges, data gaps, and uncertainty",
      "content": "- Identifies major challenges confronting climate risk analysis in FSAPs, including:\n  - data gaps\n  - uncertainty regarding climate projections\n  - long simulation horizons required for climate risk analysis\n- Notes methodological and practical constraints that limit precision but underlines the role of analysis in raising awareness and guiding adaptation."
    },
    {
      "heading": "Policy implications and recommendations (IMF staff focus)",
      "content": "- Emphasizes the need for:\n  - banks to develop tools to manage climate risks,\n  - financial sector supervisory authorities to adequately supervise climate risk,\n  - integrated analytical approaches within FSAPs to inform policy and supervisory priorities.\n\nSource: Approaches to Climate Risk Analysis in FSAPs, Staff Climate Notes 2022/005 (July 14, 2022).\n\n---\n\n Content in this bundle\n\n- Approaches to Climate Risk Analysis in FSAPs; IMF Staff Climate Note 2022/005; July 2022\n  - Approaches to Climate Risk Analysis in FSAPs; IMF Staff Climate Note 2022/005; July 2022 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Approaches to Climate Risk Analysis in FSAPs; IMF Staff Climate Note 2022/005; July 2022 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/staff-climate-notes/issues/2022/07/12/approaches-to-climate-risk-analysis-in-fsaps-519515"
    }
  ],
  "bullets": [
    "[Markdown version](/en/publications/staff-climate-notes/issues/2022/07/12/approaches-to-climate-risk-analysis-in-fsaps-519515/index.md)",
    "[Structured JSON version](/en/publications/staff-climate-notes/issues/2022/07/12/approaches-to-climate-risk-analysis-in-fsaps-519515/index.json)",
    "[Bundle manifest](/en/publications/staff-climate-notes/issues/2022/07/12/approaches-to-climate-risk-analysis-in-fsaps-519515/bundle-manifest.json)",
    "Authors: Tobias Adrian, Pierpaolo Grippa, Marco Gross, V. Haksar, Ivo Krznar, Caterina Lepore, Fabian Lipinsky, Hiroko Oura, Sujan Lamichhane, Apostolos Panagiotopoulos",
    "Published: July 14, 2022",
    "Series: Staff Climate Notes",
    "DOI: https://doi.org/10.5089/9798400212895.066",
    "Sets out the IMF staff’s emerging approach to assessing the impact of climate change on banking sector stability risks within the Financial Sector Assessment Program (FSAP).",
    "Emphasizes that understanding climate risks is key to preparing for a successful transition to a lower carbon global economy and unlocking opportunities from technological progress and structural transformation.",
    "Focuses on methods IMF staff are deploying to raise awareness of risks and adaptation needs, including:",
    "Distinguishes two principal categories of climate risk:",
    "Explains technical terms and concepts used in climate risk analysis relevant for FSAP work.",
    "Describes how the standard risk analysis framework used in FSAPs would be modified in broad terms to integrate climate risk considerations.",
    "Highlights mapping channels from macroeconomic and real-economy effects into banking sector stability risks.",
    "Discusses different analytical approaches for:",
    "Explains how effects on the macro-economy and real sectors vary by sector and geography, and how these heterogenous effects feed into bank exposures and stability assessments.",
    "Illustrates how physical and transition risks map into banking sector stability risk assessments undertaken in FSAPs.",
    "Positions stress testing and scenario analysis as central tools for quantifying potential impacts on bank portfolios and system-wide stability.",
    "Provides examples from recent FSAPs to illustrate key concepts and methodological choices used in practice.",
    "Identifies major challenges confronting climate risk analysis in FSAPs, including:",
    "Notes methodological and practical constraints that limit precision but underlines the role of analysis in raising awareness and guiding adaptation.",
    "Emphasizes the need for:",
    "**Approaches to Climate Risk Analysis in FSAPs; IMF Staff Climate Note 2022/005; July 2022**"
  ],
  "related": [
    {
      "title": "Approaches to Climate Risk Analysis in FSAPs; IMF Staff Climate Note 2022/005; July 2022",
      "role": "document",
      "sourceUrl": "https://www.imf.org/-/media/files/publications/staff-climate-notes/2022/english/clnea2022005.pdf",
      "summary": {
        "path": "/-/media/files/publications/staff-climate-notes/2022/english/clnea2022005.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/-/media/files/publications/staff-climate-notes/2022/english/clnea2022005.pdf",
        "mime": "application/pdf"
      }
    }
  ],
  "alternates": {
    "markdown": "/en/publications/staff-climate-notes/issues/2022/07/12/approaches-to-climate-risk-analysis-in-fsaps-519515/index.md",
    "json": "/en/publications/staff-climate-notes/issues/2022/07/12/approaches-to-climate-risk-analysis-in-fsaps-519515/index.json",
    "bundleManifest": "/en/publications/staff-climate-notes/issues/2022/07/12/approaches-to-climate-risk-analysis-in-fsaps-519515/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-21T19:21:38.613Z"
}