supervisor and ask them about the role of esg risks in day to day supervision, you would find climate - related risk relatively absent thus far. overall, we are currently only beginning to move from theory to practice. and this is where the real challenge lies. there are several areas where progress is needed, the most pressing of which is risk management. we have recently surveyed all german lsis and asked them to what extent they are taking into account climate - related risks in their risk management and what they are planning for the near future. the good news is : around one - third have integrated climate - related risks into their risk assessment, at least in part. the not so good news : around two - thirds have not integrated climate - related risks at all. of these, only a third are planning to do so in the future. our findings are consistent with surveys among sis conducted by the ssm, eba, and the ngfs. clearly, the integration of esg or even only climate - related risks into banks ’ risk management is still in its early stages. this will have to change soon if we bear in mind the work on regulatory standards in the eu and bafin ’ s guidance note on esg risks that is expected to be finalised before the end of the year, but more importantly because climate - related risks are relevant. this has been a short fly - over over the progress made so far regarding sustainable finance. how about digitalisation of the financial sector and supervisory challenges? digitalisation is not that new anymore ; it has now diffused into various niche topics and existing 2 / 4 bis central bankers'speeches supervisory compartments – e. g. cyber and it security ; third parties and open banking ; business model analysis ; regulatory perimeter ( esp. regarding fintechs and bigtechs ). also, the prudential and supervisory treatment of crypto tokens has become a separate realm – with many connections to traditional segments such as operational risk or prudential requirements. we have achieved significant progress in updating and concretising our standards, e. g. regarding it - related expectations or also regarding outsourcing activities. however, within most of those topics, fundamental questions remain. for example, should we directly supervise third parties such as cloud service providers? and how do we deal with it becoming more and more crucial to the functioning of the financial sector? we do exert pressure on banks to remedy their gaps in it risk management – but when it

hubs and sustainable finance networks we are seeing emerge within supervisory institutions are an attempt to overcome this challenge. 3 / 4 bis central bankers'speeches if our organisational structures do not fit and, more broadly, our supervisory structure doesn ’ t fit, then we should not hesitate to adjust to the new realities. we must pinpoint where and how exactly we must adapt. and that ’ s the task i want to define for today and tomorrow. how do we deal with a lack of expertise in certain fields? do we create it from within? do we acquire it from without? how do we deal with the complexity and the horizontal nature of the topics? how can we improve cooperation between different departments internally, cooperation between each other and cooperation with other players like academia, ngos, etc.? these are the questions i invite you to ponder over the coming two days. 5 conclusion ladies and gentlemen, sustainable finance and digitalisation pose unprecedented challenges for supervisors. in some areas, they have exposed the limits of our current approach to supervision. and they are forcing us to adapt. i have sketched some of the strategic challenges that follow, but i have not provided a solution. that is what i am inviting you to think about during the conference. and in case you might get lost in details, remember that our anchor point is quite simple : to maintain our ability to perform solid supervision under new circumstances. thank you for your attention. 4 / 4 bis central bankers'speeches