Climate analysis likely understates risk, say FSB and NGFS
Study finds scenario analysis struggles to capture more complicated dynamics
A study of climate scenario analysis around the world finds many of the approaches in use currently may be understating the true scale of the financial risks from climate change.
Work by the Financial Stability Board and Network for Greening the Financial System finds scenario analysis plays a “critical role” in allow regulators to understand climate risks.
But the report also says measures of exposure and vulnerability are “likely understated”. It highlights how many metrics do not capture
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