The Bank for International Settlements & the Monetary Authority of Singapore Unveil Blueprint for Climate Risk Platform

The Bank for International Settlements (BIS) and the Monetary Authority of Singapore (MAS) have developed a blueprint for an integrated platform to help financial authorities identify, monitor and manage climate-related risks in the financial system.

Called Project Viridis, the initiative outlines key features and metrics needed for a climate risk platform that incorporates data on financed emissions, physical risk exposures, and forward-looking climate scenario analysis.

Integrating climate risk analysis into financial stability monitoring remains challenging due to climate change's complexity, data gaps, and limited understanding of how to quantify the associated risks.

"As the impact of climate change on the global financial landscape intensifies, the need for adaptive and forward-thinking strategies has never been more urgent," said Maha El Dimachki, Head of the BIS Innovation Hub Singapore Centre. "Project Viridis helps equip financial authorities with the insights needed to integrate emerging climate risks into their analysis – and thereby help promote global financial stability."

The project's report serves as a blueprint for building a climate risk platform that integrates regulatory data with climate data extracted from corporate disclosures using natural language processing. This provides authorities an initial view of financial institutions' climate exposures across metrics like emissions financed and physical risks.

"Project Viridis is an innovative, collaborative blueprint that leverages technology solutions to systematically track climate-related data and metrics, thereby augmenting regulators' efforts in assessing physical and transition climate risk exposures of individual banks and the financial system," said Celine Sia, MAS Assistant Managing Director.

The platform utilizes technology architecture developed by the BIS Innovation Hub Singapore Centre and MAS, enhanced through collaboration with financial authorities worldwide. It builds on the Ellipse Data and Knowledge Platform, which enables integration of structured and unstructured data.

As data gaps are bridged and methodologies evolve, the climate risk platform could become an essential tool for supervision and macroprudential surveillance in the face of escalating climate threats.

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