On Apr. 11, CSA Que issued draft climate scenario analysis exercise.
CSA Que, C-OSFIstandardized climate scenario analysis exercise (SCSE) consultation.
Provided a summary of feedback; follows phase one of draft SCSE, see #188105.
CSA Que issued draft climate risk management guideline, which sets out expectations for the management of climate-related risks and climate scenario analysis, #193357.
SCSE Methodology Objectives
Increase understanding of QUE financial institutions (FIs) re climate risk exposure.
Strengthen the capacity of targeted institutions to conduct climate scenario analyzes and risk assessments; measure potential financial exposure to climate-related risks.
Draft Methodology
Used stakeholder feedback from the first phase of the SCSE consultation to update the draft methodology, and create a draft workbook along with a set of instructions.
Scenario analysis is a tool used to measure outcomes given different possible future states; often refers to future states that reflect different possible climate policies.
Aims to measure climate risks not reflected using traditional quantification techniques.
SCSE will consider characteristics associated with individual exposures not typically used today but may provide strong risk discrimination under future climate scenarios.
Will not consider broad impacts of macroeconomic stresses since FIs’ stress testing, capital requirements already consider stressed macroeconomic environment impact.
Consultation
Comments on the second phase of SCSE must be submitted by Jun. 7, 2024.
Information session to be held on May 2; interested parties must register by May 1.
Sep. 10, 2024 C-OSFI Final SCSE
On Sep. 10, 2024, C-OSFI released finalstandardized climate scenario exercise (SCSE)
SCSE is a tool for measuring potential exposure of financial institutions to climate risk.
Specifically, the SCSE will gather data to help assess potential risks re climate change and prepare for future challenges and identify vulnerabilities in the financial system.
Key objectives for the SCSE include raising awareness and encouraging a strategic orientation with FRFIs to better understand the potential exposures to climate change.
Also encouraging the building of FRFIs' capacity to assess the impact of climate related catastrophic events and policies and to conduct climate scenario analysis exercises.
And establishing a standardized quantitative assessment of climate related risks.
FRFIs, except foreign bank branches, to submit SCSE workbook and questionnaire.
Credit and market risk modules must submit their results by Dec. 13, 2024.
The deadline to submit the SCSE for flood and wildfire risk modules, the real estate transition risk exposure assessment, and the questionnaire is Jan. 24, 2025.
Sep. 10, 2024 CSA Que Final SCSE
On Sep. 10, 2024, CSA Que reported issuance of final version of standardized climate scenario exercise (SCSE) for certain Québec financial institutions, with methodology.
Deadlines for completing SCSE for credit risk and market risk modules Dec. 13, 2024.
For completing SCSE for modules on flood and forest fire risks, assessment of exposure to transition risks related to real estate, questionnaire is Jan. 24, 2025.
