continent most affected by geophysical events, where typhoons, earthquakes, landslides and flash floods accounted for 43 % of all events worldwide and for 74 % of fatalities. while storms and droughts have long been familiar to this region, they have become more intense, more prolonged and more frequent. this translates into greater economic loss for governments, businesses and households – which in turn, can make its way into the financial system. evidence of these effects can clearly be seen from recent events : the thai floods in 2011 cost usd45 billion in damages and affected 240, 000 small businesses. carmakers in malaysia, japan and the us had to slow down production due to the interrupted supply of parts from thai factories. prolonged supply chain disruptions, which took months to recover, had direct financial and economic implications – thai exports fell, its budget deficit widened and the economy shrank by around 2 %. the total cost to the thai economy was much higher if we account for the cost of repairs, rebuilding and mitigation measures to prevent a repeat of the disaster. 1 / 5 bis central bankers'speeches closer to home, the floods that hit kelantan and terengganu in 2014 were among malaysia ’ s worst ever. more than 200, 000 people were affected and displaced. businesses and financial institutions had to temporarily shut their operations. economic activities and financial intermediation were disrupted. the government spent over rm2 billion to rebuild basic infrastructure, such as roads and schools. the average cost to individual households was estimated to be more than two years of income for their breadwinners. in 2017, massive floods in penang and kedah saw similar effects. banks also bore the costs of moratoriums on loan repayments that were provided to those affected by such disasters. as climate - related events intensify, these costs will escalate. as a result of the severe and prolonged el nino drought in 2016, the agriculture sector in malaysia shrank by 5. 2 %. last year, adverse weather ( and production constraints ) dented yields yet again, causing the sector to contract by up to 2. 5 % in the second quarter. this is not an isolated problem for the agriculture industry. these shocks can also jeopardise domestic food production and cause prices to inflate. for instance, the irregular weather and prolonged haze conditions in 2015 caused the prices of fresh vegetables to rise by 7. 7 %. climate change can also affect the economy structurally and gradually. we know that

nor shamsiah mohd yunus : keynote address - regional conference on climate change keynote address by ms nor shamsiah mohd yunus, governor of the central bank of malaysia ( bank negara malaysia ), at the regional conference on climate change, kuala lumpur, 25 september 2019. * * * it is my pleasure to welcome you to today ’ s regional conference on climate change. the recent shroud of haze in malaysia and neighbouring countries is a timely reminder of the environmental challenges confronting our generation and the generations to follow. with the passing of time, these challenges have become more pressing, and their consequences more dire. yet, our response – at the industry, national and global level – is only just beginning to catch up to the enormous task we face. as described by the former un secretary - general, “ we are the last generation that can take steps to avoid the worst impacts of climate change ”. climate change does not just threaten polar bears in the arctic. it also threatens our socioeconomic prosperity here in southeast asia. it poses risks to the fiscal position of governments, the viability of businesses and the living standards of individuals. as such, the effects of climate change are not merely an ecological problem for scientists and conservationists to worry about. it presents a major economic issue with direct implications on financial stability. it is for this reason that bank negara malaysia, along with many other central banks around the globe, are giving serious attention to climate risk. in my remarks today, i will outline : why climate change matters for the economy and for financial institutions, and ; how we can and must work towards building climate resilience. why climate change matters for the economy and financial institutions the financial sector is an important enabler of economic growth. the ability of financial institutions and authorities to identify and manage risks that can impair financial intermediation has direct consequences on the performance of the financial sector and the economy. these risks impact those we invest in, lend to, promise to cover and strive to create wealth with. climate change impacts all of them, in increasingly significant and lasting ways. as we have seen in recent years, climate change is causing greater volatility in weather patterns. globally, overall economic losses arising from natural disasters have been on an increasing trend for the past 40 years. in 2018, such losses amounted to usd160 billion – half the size of malaysia ’ s economy, and among the costliest disaster year on record. last year, asia was the