The E-axes Forum on Climate Change, Macroeconomics, and Finance

Dirk Broeders

“Climate change uncertainty and central bank risk management”

Event description

Dirk Broeders presented his paper “Climate change uncertainty and central bank risk management,” which he co-authored with Marleen Schlooz. From the abstract:

The drastic change in the Earth’s climate is a key concern for central bank risk managers. The consequences of climate change for the economy are harmful and potentially far-reaching. Central banks are exposed to climate change through their asset purchase programmes and credit operations and via the impact of climate change on the economy in general. Risk management in this case is challenging and complex because climate change is surrounded by fundamental uncertainty. Given this fundamental uncertainty, risk managers can however rely on the precautionary principle for practical purposes. This principle aims to anticipate and minimise the potential impact of serious or irreversible events under conditions of uncertainty. Stronger risk mitigating measures taken at an early stage serve as a hedge against the cost of enduring temporary catastrophes or draconian interventions at a later stage. This paper discusses the fundamental uncertainty of climate change and offers some recommendations for the identification, assessment, mitigation and disclosure of climate change uncertainty in central bank risk management. These recommendations are however equally relevant for commercial banks and institutional investors.

Moderator:

Pierre Monnin
Senior Fellow, CEP

Dirk Broeders

Dirk Broeders is a Senior Financial Risk Manager at the Financial Markets Division of De Nederlandsche Bank and a Full Professor of Finance at the School of Business and Economics of Maastricht University. He is a former Executive Member of the International Organisation of Pension Supervisors and served as a Fellow at the Financial Stability Institute of the Bank for International Settlements. He has published widely on finance and obtained his Ph.D. from Tilburg University.

Paper and slides

"Climate change uncertainty and central bank risk management" (Paper)

"Climate change uncertainty and central bank risk management" (Slides)

Tags

Share

Related Webinars

Policy
September 9, 2024
Catherine D. Wolfram
Professor of Energy Economics
MIT Sloan School of Management
Research
June 18, 2024
Zacharias Sautner
Professor of Sustainable Finance
University of Zurich
Research
June 10, 2024
Eric Jondeau
Professor of Finance
HEC Lausanne

Upload Research

  • Accepted file types: pdf, Max. file size: 50 MB.
  • This field is for validation purposes and should be left unchanged.

Subscribe to Our Newsletter

  • This field is for validation purposes and should be left unchanged.

Donate Now