To achieve proper risk management, collaboration and discussion between institutions becomes important. Everyone knows that climate-based financial risks are challenging and difficult to approach, as we haven’t yet established a common framework. I hope we can lay a few building blocks for this framework today.
To that point, last year, the Federal Reserve Board, the Securities and Exchange Commission, and the Office of the Comptroller of the Currency jointly issued an interagency paper, “Sound Practices to Strengthen the Resilience of the U.S. Financial System.” That paper provides guidance that supplements long-standing principles of business continuity planning and disaster recovery and is directed at the entities that pose systemic risk to the financial system, particularly in the context of their clearing and settlement activities.