Federal Reserve Board provides additional details on how its pilot climate scenario analysis exercise will be conducted and the information on risk management practices that will be gathered over the course of the exercise

Following the announcement of an upcoming „pilot climate scenario analysis exercise“ for six of the largest banks in the U.S. including the Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo, on September 29, 2022, the Board of Governors of the Federal Reserve System (FED) has now published further information on the issue.
To recall, the FED plans to conduct this exercise early 2023. It requires participating institutions to simulate diverse climate change scenarios and report the impacts of such scenarios upon their income statements and balance sheets to indicate their financial resilience. The exercise will encompass both transitional and physical risk simulations. The results of the exercise will not be used to determine future capital requirements of supervised institutions. Instead, the exercise is considered an initial tool to help regulators and institutions alike to improve the management of climate-related financial risks and measure latter’s impacts upon the resilience of institutions.
The FED has now published the following key documents in this context:
(1) the instructions for the performance of the „pilot climate scenario analysis exercise“ which includes a description of the general design of the exercise, details on the different scenarios included in the exercise, filing instructions for the accompanying templates, and general information on the submission deadlines, data quality standards, and model assumptions, and many other issues.
(2) the templates to be used in the exercise.
The FED will issue separate instructions in due course for the submission of the templates.