The events of 11 September have strengthened all the parties' awareness of the extent of international integration in a crisis situation. While the benefits of international cooperation have so far been undisputed, at least theoretically, empirical evidence has now been provided. Cooperation among the authorities in the various countries on the level of the Bank for International Settlements, the relevant committees of central bank governors of the Group of Ten and the International Monetary Fund is to be intensified. 8. A current example of such efforts can be found in the payment systems sector. Any strains on the financial system can spread rapidly as a result of the international integration of participants as well as of payment and settlement systems. Increased attention must be paid to devising and linking systems such as Switzerland's SIC (Swiss Interbank Clearing) and the planned CLS (Continuous Linked Settlement) among others. 9. Further problems which must be dealt with in particular by the private financial industry concern the inadequate geographic diversification of production locations and backup facilities, which have proved less than satisfactory in some cases. 2  BIS Review 101/2001
How climate risk is relevant to the fund What does this approach to managing the fund mean for the fund’s climate risk? With a wide spread of investments, we are protected against events that affect specific companies or sectors. But we cannot protect ourselves against events or trends that affect everyone. The fund is exposed to two kinds of climate risk: physical risk and transition risk. Transition risk is about how the companies we invest in handle the transition to a low-carbon economy. The size of this challenge differs widely between sectors and companies. Chart: Transition risk and the fund The fund’s equity investments can be categorised by transition risk as measured by analysis firm MSCI. The blue columns in the chart show each category’s share of the value of the portfolio. The white columns show their emissions. Companies in the “transition” category have high emissions and therefore need to make the biggest changes. These make up 14 percent of the equity portfolio. The remainder are companies considered either to have neutral exposure or to contribute positively to the transition. These last companies are therefore part of the solution.1 Physical risk is linked more directly to climate change. The most obvious example is acute events such as extreme weather, but more gradual changes such as higher temperatures, droughts and rising sea levels may also impact individual investments, both negatively and positively.