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Climate change as a risk to financial stability

Wolfgang Pointner () and Doris Ritzberger-Grünwald ()
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Wolfgang Pointner: Oesterreichische Nationalbank
Doris Ritzberger-Grünwald: Oesterreichische Nationalbank,

Financial Stability Report, 2019, issue 38, 30-45

Abstract: In this study, we give an overview of risks to financial stability that result from climate change. We classify them according to their sources and show how they affect traditional categories of financial risk. Most financial institutions have yet to acknowledge these types of risk, with only a few having to date recognized climate change as a market opportunity. Over the past few years, both private and public institutions have, however, started to find better ways to identify, assess and manage climate-related risks, especially since the Paris Climate Agreement. Which data and indicators are needed to implement effective risk management in this area? While metrics and methods are available to financial intermediaries for this purpose, they are not yet widely used in practice. In the latter part of our study, we explore the awareness of Austrian financial intermediaries of climate-related financial risks empirically. Based on survey data, we find that some institutions have already integrated climate change into their business strategy and risk management systems, while a large share of institutions has not yet identified climate change as a financial risk at all. The fact that a majority of financial intermediaries had cited regulations and norms as effective motives for better adapting to the risks of climate change calls for future action by policymakers and regulatory authorities.

Keywords: climate change; financial risk; risk management (search for similar items in EconPapers)
JEL-codes: G18 G32 Q54 (search for similar items in EconPapers)
Date: 2019
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