Regarding the first one, the publication at the beginning of the month of the last contribution to the IPCC 6th assessment report on climate change mitigation reminds us of the need for an urgent transition toward carbon neutrality, which will entail major transition risks for banks. Supervisors have already started to assess the exposure and disclosure of financial institutions to those risks to incentivize them to identify, assess and manage those risks as mainstream ones– and the ACPR played a pioneering role in this respect, with the achievement of the first bottom-up climate risks stress-test last year. From now on climate risks will be progressively integrated into the prudential framework,  starting with pillar 3 and pillar 2 requirements. Banks must step up their efforts to prepare meeting these forthcoming regulatory requirements, including those related to climate stress-tests and banks’ transition plans, which are part of the CRD6 proposal currently in negotiation. As regards the pillar 1 framework, let me note that the integration of climate risks is still a hotly debated topic and I hope the upcoming publication of a discussion paper by the EBA on this issue will allow us to move forward. We shouldn’t jump to conclusions though. There are many methodological and data shortcomings to address before implementing new requirements. In any case, let me emphasise that from my supervisory perspective the pillar 1 should remain risk-based and that we should overcome the green / brown dichotomy by assessing transition risk on the basis of the transition plans instead.

Financial education initiatives must aim to increase consumer understanding of insurance, including how to navigate in an environment with multiple delivery channels and how to seek avenues for redress where products and services fall short of expectations. Governance and risk management Insurers pursuing new distribution strategies will need appropriate governance and risk management to ensure that emerging sources of financial and operational risks are well contained. Insurers’ strategic planning process must take into account their competitive positioning, the target risk / reward trade-off and financial capacity to absorb losses. Prior to introducing a new distribution channel, insurers must ensure they have the capacity, including the appropriate expertise and resources, to adequately manage and control the  17  BNM Payment Systems Policy Department. 18  BNM IFAS and TOSS System. 4  BIS central bankers’ speeches  risks associated with that channel and possible spillovers onto existing business. Policies and procedures for managing and mitigating new types of risks will need to be developed and implemented across the whole value chain, including product development, authorisation, pricing, marketing, sales, post-sales servicing and portfolio management. These will need to be designed to ensure that the insurer continues to operate within its predetermined risk appetite and limits. Success in the new insurance distribution landscape will require strong internal communication flows to ensure that the governance and risk management across all distribution channels are fully integrated with the insurers’ operations and control functions.