27. Institutions should assess how transition and physical environmental risks propagate through …

Institutions should assess how transition and physical environmental risks propagate through relevant transmission channels, and materialise in established risk categories, including:

• a. business model and strategic risk (e.g. higher cost of risk and lower profitability); FINAL REPORT ON GUIDELINES ON ENVIRONMENTAL SCENARIO ANALYSIS
• b. credit risk (e.g. counterparties default or increased probability of default, impact on collateral values);
• c. market risk (e.g. loss of value of financial assets, increased volatility, widening of credit spreads on certain assets);
• d. liquidity risk (e.g. difficulties in accessing financing or liquidating assets, increased liquidity needs of customers); and
• e. operational risk (e.g. sudden or gradual disruptions to processes, including absence of staff and IT outages).

1. Overview

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

• EBA - Published by the European Banking Authority at https://www.eba.europa.eu/