15 The Federal Housing Finance Authority recently issued a request for input on natural disaster risk to the housing finance system; see Federal Housing Finance Agency (2021), “FHFA Issues RFI on Climate and Natural Disaster Risk Management at the Regulated Entities,” news release, January 19, https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Issues-RFI-on-Climate-and-Natural-DisasterRisk-Management-at-the-Regulated-Entities.aspx. 14  -8reduce the extent of hidden climate risks.
While such transparency is vital, financial system vulnerabilities could arise even in transparent markets—for example, through aggregate common exposures to climate risk. Finally, climate-related physical risks are increasing financial burdens on local, state, and federal finances. Increasing physical damage to localities necessitates higher expenditures to repair damage from extreme weather and fire events and to build resilience to growing climate threats.