The Bank of England has published its ‘Key elements of the 2021 Climate Biennial Exploratory Scenario’ to help explore the financial risks posed by climate change for some of the UK’s largest banks and insurers.

For more background information, we have previously covered this topic in our earlier Newsflash.

The Bank of England (BoE) has invited ten insurers to participate in the exercise, including four life firms, five general insurance firms, and one composite insurer, as well as seven banks/building societies and a selection of ten Lloyd’s managing agents.

The BoE’s desired outcomes of this exercise are to:

• Quantify the financial exposure of participants (and the broader financial system) to climate-related risks, including the assessment of any systemic risk that may arise as a result of climate change;

• Understand the challenges to participants’ business models from these risks; and

• Help participants in enhancing their management of climate-related financial risk, consistent with expectations outlined in Supervisory Statement 3/19.