Legal & Regulatory News

The Bank of England launches second round of its Biennial Exploratory Scenario exercise on financial risks from climate change

On 9 February 2022, the Bank of England launched the second round of the Biennial Exploratory Scenario (BES) exercise on financial risks from climate change, with the intention of exploring the financial risks posed by climate change for the UK's largest banks and insurers.

This second round of the BES will consist of a small number of questions that will focus on the second objective of the BES, which is to understand the challenges to participants’ business models from climate-related risks, and gauge their likely responses, as well as the implications for the provision of financial services.

The second round will comprise of a small number of questions exploring participants' strategic responses to the three scenarios published as part of the first round of the BES, as well as the associated implications for their business models. The LMA produced an article on the initial BES, outlining these scenarios here.

Institutions will not be required to update quantitative loss projects that were provided in the first round and the deadline for participants' second round submissions is the 31 March 2022.

Click here to view the Bank of England's press release.