US banks report ‘data gaps’ during pilot climate scenario analysis

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US banks report ‘data gaps’ during pilot climate scenario analysis

By Alexandra Leonards

10/5/2024

US banks have come up against data gaps and modelling challenges during an exploratory pilot climate scenario analysis exercise.

The analysis was carried out to help six of America's top banks understand the resiliency of their business models to climate-related financial risks.

The pilot, conducted by the Federal Reserve and the Bank of America; Citigroup; Goldman Sachs; JPMorgan Chase; Morgan Stanley; and Wells Fargo, found that these issues occur when estimating the financial impacts of highly complex and uncertain risks over various time horizons.

The Federal Reserve said that as the exercise was exploratory in nature, it does not have any capital consequences.

It went on to say that after learning lessons from the exercise, it will continue to engage with participating banks regarding their capacity to measure and manage climate-related financial risks.

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