57. When performing resilience analysis, institutions should consider the feedback loops stemming …

When performing resilience analysis, institutions should consider the feedback loops stemming from the adaptation of the financial sector to rising risks (e.g., reduced insurance coverage in climate-vulnerable regions lowering asset values and creditworthiness, which in turn amplifies financial losses and limits future investment) and its contribution to the financing needs of the economy. To this end, institutions should monitor capital reallocation movements and possible crowding-out effects in sectors or subsectors most affected by transition efforts (e.g., a shift away from carbon-intensive sectors due to increased risk perception, or excessive investor focus on green assets leading to mispricing and reduced financing availability for transitional sectors or vulnerable SMEs).

1. Overview

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

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