The Federal Reserve will encourage financial institutions to assess the potential financial ramifications of climate change by conducting stress tests, similar to those performed following the 2007-09 financial crisis.
In a speech delivered Thursday at the Federal Reserve Stress Testing Research Conference, Fed Governor Lael Brainard told attendees financial institutions would be wise to conduct climate scenario analyses that “model the possible financial risks associated with climate change and assess the resilience of individual financial institutions and the financial system to these risks.”
