of Bank for International Settlements (BIS) Innovation Hub and Monetary Authority of Singapore (MAS) Created the blueprint – Project Viridis – The Climate Risk Platform, which aims to help financial authorities identify, monitor and manage climate risks in the financial system.
Recognizing the financial risks posed by climate change and the transition to a low-carbon economy, central banks and financial authorities are increasingly being called upon to ensure climate-sensitive regulatory oversight.
The complex nature of climate change, its global impacts, and different mitigation strategies across jurisdictions make monitoring and analysing climate-related financial risks particularly challenging.
In response, the BIS and MAS launched Project Viridis to explore the development of a climate risk platform.
The platform leverages existing data sources to provide early insights into organizations that may be exposed to climate-related financial risks.
The modular design allows for the integration of further advances and international harmonization on climate data and indicators, providing richer insights over time.
Key features of the platform include understanding financing emissions at a system-wide and institution level, consolidating reported and modelled emissions from key trading partners, and mapping the geographic distribution of assets to assess transition risk exposure due to changes in carbon pricing policies and physical hazards.
The report outlines solution designs for future platform capabilities as more data and methodologies become available.
Project Viridis shows how integrating regulatory and climate data can give authorities insights into climate-related financial risks.
Natural language processing techniques will be used to extract relevant data from company disclosures, helping authorities form an initial view of financial institutions’ risk exposure and identifying areas for more detailed assessment.
Project Viridis was first announced in the BIS Innovation Hub Work Plan in January 2022. As its underlying architecture, the Viridis platform uses the Ellipse Data and Knowledge Platform (EDKP), jointly developed by the BIS Innovation Hub Singapore Centre and MAS. Project Ellipse.
EDKP enables the integration of structured and unstructured data from various sources and is jointly powered by over 15 central banks and financial regulators around the world.
Project Viridis’ final report provides more detailed information about the platform and its potential uses.
Maha El Dimachiki
“As climate change intensifies its impact on the global financial environment, the need for adaptability and future-proofing strategies has never been more urgent.”
Project Viridis will provide financial authorities with the insight they need to incorporate emerging climate risks into their analysis, thereby contributing to promoting global financial stability.”
Maha El Dimachiki, Director of the BIS Innovation Hub Singapore Centre, said:
Celine Sia
“Project Viridis is an innovative and collaborative blueprint that leverages technology solutions to systematically track climate-related data and metrics, strengthening regulators’ efforts to assess the physical and transition climate risk exposures of individual banks and the financial system.”
This project addresses a common need among financial authorities around the world, and we look forward to further collaboration to expand this toolkit.”
Ms Celine Seah, assistant managing director (Economics and Knowledge Management) at MAS said:
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