Bangladesh: Technical Assistance Report-Report on Climate Risk Analysis
Technical Assistance Reports, May 17, 2024
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- Bangladesh: Technical Assistance Report-Report on Climate Risk Analysis
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Bibliographic details
- Published: May 17, 2024
- Series: Technical Assistance Reports
- DOI: https://doi.org/10.5089/9798400275371.019
Mission and objectives
- A Technical Assistance (TA) mission was conducted in Dhaka, Bangladesh, from March 5 to 9, 2023.
- Mission objectives:
- Propose a risk assessment framework tailored to available data, with a focus on the impact of floods on the banking sector.
- Take stock of financial and climate data availability and identify data gaps.
- Set up collaboration and data sharing mechanisms, taking into account legal obligations and confidentiality constraints, between multiple agencies.
Data and methodology
- Main climate and financial data sources were identified and existing data gaps were documented.
- Preferred assessment approach:
- A micro approach based on high-granularity, borrower-level assessment using geo-located bank exposure data.
- Alternative approaches:
- Two alternative options relying on more aggregate data (lower granularity or country-level exposures), which may produce estimates of lower precision and output of lower quality.
- Framework choice guidance:
- The choice of framework should aim to strike the right balance between timeliness and quality of the analysis.
Key findings
- The micro approach (borrower-level, geo-located exposure data) is preferred for higher precision in climate risk assessment for the banking sector.
- Alternatives that use aggregate or country-level exposures can be implemented where micro data are unavailable but may yield lower precision and lower-quality outputs.
- Data availability and data sharing arrangements, constrained by legal obligations and confidentiality, are critical enablers for a granular climate risk assessment.
Policy recommendations and implementation priorities
- Prioritize collection and maintenance of high-granularity, geo-located bank exposure data to enable borrower-level climate risk assessment.
- Establish collaboration and data sharing mechanisms across multiple agencies, explicitly accounting for legal obligations and confidentiality constraints.
- Where micro data are not feasible, document limitations and expected reductions in precision when using more aggregate approaches.
- Select a risk assessment framework that balances the trade-off between timeliness and the quality of analytical outputs.
Content in this bundle
- tarea2024039 — PREFACE and Chapter 13