But by and large, governments put in place the necessary measures to save both lives and livelihoods; scientists and industry came together to produce vaccines in record time; 8/9  BIS central bankers' speeches  businesses adapted and changed to continue providing goods and services; and people around the world took the necessary precautions, adjusted to new ways of living and working, made sacrifices, and helped one another out. With that same spirit, difficult as it may be, the world will get to net zero and avert climate disaster. It will be a better world, and a better Singapore. 9/9  BIS central bankers' speeches
This is a major challenge: climate risk is very different from traditional financial risks, and we cannot rely on historical data to size it. Another factor that makes this difficult is the need for banks and insurers to understand the carbon impacts of the real economy firms they finance. It can be hard to judge where real economy firms are, never mind where they are going – and it is the latter that is most important when thinking about future risks. The Climate Biennial Exploratory Scenario (CBES) The Bank’s exploratory climate scenario exercise – which we call the ‘CBES’ – was launched last year and is intended to help address these capability gaps. For the largest UK banks and insurers, we asked for granular analysis of the risks they might face, and their strategic responses, in three stylised 30-year scenarios: An ‘early action’ (EA) scenario where climate policy is ambitious from the beginning, with a gradual intensification of carbon taxes and other policies over time. As a result, global warming (relative to pre-industrial levels) is successfully limited to 1.8°C by the end of the scenario, falling to around 1.5°C by the end of century. You could view this as a reasonable best-case scenario for climate risk. A ‘late action’ (LA) scenario where policy measures are delayed by a decade, and then are implemented in a sudden and disorderly way, leading to material economic and market disruption.