However, their results “suggest overall costs will be lowest with early, well managed action to reduce greenhouse gas emissions and so limit climate change”. Closer to home, Australia’s prudential regulator launched their climate vulnerability assessment last year, with results set to be revealed later this year.
When we began incorporating climate risks into our stress testing last year, we used a scenario considering the impacts of drought in the North Island for large banks. We also conducted our first insurance stress test. It included a scenario with more severe and frequent weather events to gauge risks to insurers’ capital.