Pressing global challenges and high uncertainty rightly command our attention in the current juncture, but they also threaten to overshadow issues such as climate change. Meanwhile, physical risks of climate change are becoming more evident, and the global transition remains too slow.
Governor Krogstrup commented: “Rather than looking away, the many concurrent challenges should reinforce our commitment to addressing these in a risk-based, prioritized manner.”
Scenario analysis is a cornerstone of climate risk assessment. While climate policy is a government responsibility, climate-related risks fall squarely within the mandates of central banks. At Danmarks Nationalbank, climate work is integrated into scenario analysis and data collection. Nationalbanken has developed scenarios and collaborated with the Danish Research Institute for Economic Analysis and Modelling (DREAM) to understand how the green transition may impact the Danish economy and banks.
Governor Krogstrup concluded by calling for collaboration: “The risks arising from climate change are global and multidisciplinary. Learning from each other and collaborating is not only useful — it is necessary.”
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