insurers ( june 2020 ). see letter from sam woods to insurers on distribution of profits ( march 2020 ). all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice largest banks, insurers, and the financial system to climate related risks – as well as the scale of adjustment that will need to be undertaken in coming decades for the system to remain resilient. conducting a climate stress test poses distinct challenges compared to conventional macro - financial or insurance stress tests. the bank is using feedback from last year ’ s discussion paper to ensure it is effective and that the design is appropriate. 7 we are having further engagement with financial firms, climate scientists, economists, other industry experts, and informed stakeholder groups to support this work. we will publish scenarios in june 2021, with initial submissions due by the end of september. given this time frame we would encourage firms to start developing their capabilities sooner rather than later. our current plan is to publish results in the first quarter of 2022, following a second round of submissions if that proves necessary. ( 2 ) we will also run another comprehensive insurance stress test in 2022, which amongst other things will include a dedicated scenario for general insurers underwriting cyber risk, reflecting our view that firms still need to improve the way they assess and manage their cyber exposures. life insurers were included in the stress test for the first time in 2019 and it was hard to produce robust results, comparable across firms with diverse business models and capable of being sensibly aggregated. we will be engaging with life firms in the very near future on lessons learned from the 2019 exercise to understand better where investment is needed – by most firms – to improve capability. also what the pra can do to make the test more successful, including the way in which we specify stresses, and what can be achieved in time for the 2022 and subsequent exercises. by 2022, our objective is to be able to use our stress testing exercises alongside our other supervisory analysis to improve our insights into the resilience of both the general and life insurance sectors. looking further ahead, stress and scenario testing has more scope to develop as a supervisory tool. areas to explore include transparency and the potential role of sector - wide stress testing in the solvency assessment framework. publication of aggregate results allows the regulator to communicate to the market and the public our view on the resilience

’ balance sheets, and that some combination of crystallization of physical and transition risk is inevitable, the timing and extent of specific impacts are highly uncertain, particularly on exposures to specific industries. what should firms and regulators be doing to prepare, in the face of these multiple and potentially interacting sources of risk and uncertainty? one significant response to unknown risks and uncertainty is stress testing and scenario analysis, and that is what i want to focus on today. current firm - specific and sector - wide stress testing stress testing is already a central feature of the solvency ii regulatory regime for insurers. firm - specific stresses provide assurance that firms are highly likely to be able to meet their obligations to policyholders : the capital calculation can be thought of as a stylized, 1 - in - 200 severity stress test of the whole balance sheet. firms are also required to undertake scenario analysis within their own risk and solvency assessment ( orsa ). 4 the orsa process is designed for the firm to provide a narrative of the type of ( bespoke ) risks it is exposed to and to illustrate how resilient it is to those. to these firm - specific measures we have added periodic, regulator - led stress tests, whose purpose is to assess the sector ’ s ability to meet policyholder claims in a common scenario, which reflects micro - and macro - prudential concerns of the pra. our first supervisory stress test was in 2015 for general insurers and we have repeated the exercise every two years, bringing life insurers into it for the first time last year. our experience has been that these stress testing exercises give us valuable additional insights into firms ’ financial resilience, beyond those that can be obtained from the usual solvency capital requirement calculation. see rule 3. 8 of the conditions governing business part of the pra rulebook. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice use of a common scenario enables peer comparison to identify both genuine differences in firms ’ risk profile, and potential optimism in any one firm ’ s modelling and assessments, thus helping firms improve their risk management. it improves our understanding of the potential aggregate, systemic impact of management actions taken rationally by individual firms. it helps us to identify any concentrations in reliance on individual reinsurers, jurisdictions, or external models, for example. it informs our supervisory approach and helps us to identify priorities if a particular scenario crystal