Climate risk: IAIS announces CTA to aid authorities
The Bank for International Settlements (BIS), the International Association of Insurance Supervisors (IAIS), the Central Banks and Supervisors Network for Greening the Financial System (NGFS) and the UN-convened Sustainable Insurance Forum (SIF) will collaborate on the Climate Training Alliance (CTA) to enhance the availability of training resources for national financial authorities responding to climate risks. The joint initiative will be coordinated under climate finance adviser Mark Carney’s COP26 agenda.
Announced alongside the G20 Venice Climate Summit, the CTA brings together authorities at the forefront of climate risk management to share best practices for integrating these risks into their activities, including banking and insurance supervision, scenario analysis, monetary policy and portfolio management.
The CTA will bring together BIS FSI Connect tutorials based on handbooks, guidance and standards from international organisations, including the Basel Committee on Banking Supervision (BCBS), IAIS, UN SIF and NGFS, as well as access to the training provided by financial authorities, also members of the NGFS, starting with Bank of England, Banque de France, De Nederlandsche Bank, European Central Bank, and the Monetary Authority of Singapore. The FSI Connect platform is led by the BIS’s Financial Stability Institute (FSI).
Ahead of COP26 and beyond, these organisations are collaborating to improve the skillset of the central bank and supervisory community on managing climate risks – both physical risks from climate change itself and risks associated with the transition to net-zero. The CTA will make the relevant training on climate-related financial risks more accessible around the world, including emerging markets and developing economies (EMDEs) to support an equitable transition.
Mark Carney, COP26 private finance advisor and UN special envoy for Climate Action and Finance said: “We need to share knowledge, refine and improve the approach to climate risk management. To this end, the BIS, NGFS, IAIS and Sustainable Insurance Forum’s new Central Banks’ and Supervisors’ Climate Training Alliance (CTA) will help build capacity in central banks, improving the efficiency, effectiveness and accessibility of climate risk training and knowledge-sharing for these institutions. It will provide training across supervision of climate risks, climate scenario analysis, and how to reflect climate in collateral management, ensuring the financial sector has the knowledge and tools to effectively measure and manage climate risks by COP26 and beyond.”
Vicky Saporta, executive committee chair, International Association of Insurance Supervisors said: “Climate change will have wide-ranging effects on the insurance industry and, if left unchecked, will impact global financial stability; insurers have a central role to play in the transition to net-zero and in building climate resilience. Supervisors should have the expertise to adequately monitor and address these risks. At the IAIS we are delighted to partner with other leading international authorities to enhance the availability of training resources.”
The suite of handbooks and international standards by the Basel Committee on Banking Supervision, IAIS, NGFS and SIF on climate risk management will be developed into training materials to provide more practical support for the authorities implementing these approaches. This will be coupled with access to peer-to-peer training resources, including offering region- specific and cutting-edge training. The authorities will use the FSI Connect platform led by the BIS’s Financial Stability Institute (FSI).
