Project Viridis: a climate risk platform for financial authorities

Climate change poses new challenges to central banks, regulators and supervisors. Central banks and supervisory authorities have therefore increased their efforts to understand the impact that climate-related risks may have on financial institutions and financial stability, and the actions needed to mitigate these risks.

In the absence of globally consistent and comparable climate data, one of the main challenges authorities and financial institutions face is how they can draw on existing information and disclosures to identify and assess climate-related financial risks. As noted by the BIS in its Green Swan report, integrating climate-related risk analysis into financial stability monitoring is particularly challenging because of the radical uncertainty associated with a physical, social and economic phenomenon that is constantly changing and involves complex dynamics and chain reactions.

The Singapore Hub Centre and the Monetary Authority of Singapore have launched Project Viridis to tackle this challenge, which builds on the previous work of Project Ellipse by investigating how the platform could utilise existing regulatory data and integrate these data with external climate data sources. Project Viridis will explore the application of advanced analytics to these integrated data sources, which could then help authorities to triangulate this information to identify material climate risk drivers that could affect the safety and soundness of financial institutions and the stability of the financial system.