3 Gaps in ERA analysis and applications
5 Organization of this Occasional Paper
The rest of this Occasional Paper, consisting of 36 chapters, is organized as follows. Part I includes chapters on ERA methodologies that are or can be potentially applied by commercial banks, with a focus on analyzing credit risk implications of environment- and climate-related physical and transition risks. Part II includes chapters on ERA methodologies that are or can be potentially applied by asset managers to analyze market and credit risks of environment- and climate-related physical and transition risks, as well as methodologies developed by or for insurance companies to assess liability risks arising from their climate-related exposures. The tools and methodologies presented in most of the chapters in Parts I and II take the form of scenario analysis and stress testing and thus provide forward-looking assessments of future impact of environment- and climate-related risks facing FIs. Part III includes chapters on ESG index and rating methodologies already adopted by some asset managers to quantifying the current exposure of ESG risks of investment portfolios. Part IV includes chapters on a number of cross-cutting issues, including methodology comparison, scenario assumptions, and carbon risk assessment tools.
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