need to develop the appropriate tools to identify, monitor and manage these risks. from one perspective, climate - related risks may manifest as realizations of familiar risks such as credit, market, operational, legal and reputational risk. the tools risk managers use, however, will need to change to reflect new data, changing relationships, and evolving interconnections. traditional backward - looking models based on historical trends may no longer be reliable, so the development of forward - looking 1 / 4 bis central bankers'speeches approaches grounded in scenario - based analyses may be necessary. 4 perhaps even more importantly, physical and transition risks will likely introduce new strategic risks associated with the challenges and opportunities of sectoral reallocations of economic activity, new production patterns and evolving industry exposures. range of practices given these emerging risks, what are large financial institutions actually doing to identify, monitor, and manage them? this is a new and rapidly evolving field, so we are far from coalescing around best practices or industry standards. nevertheless, some emerging themes are emerging from the largest, most complex financial institutions. i will touch on governance, risk identification and management, scenario analysis, and transparency. i ’ ll begin with governance. boards of directors and senior management are increasingly attuned to the risks posed by climate change as pressure from various stakeholders intensifies. for example, some firms are establishing internal climate - related working groups to develop enterprise - wide climate frameworks and to ensure climate considerations such as geographic concentrations or regulatory changes are better integrated into strategic decision - making. some senior leaders are discussing risk materiality in geographic and sectoral reviews and results of forward - looking climate scenario analyses. few firms, however, have formally modified or qualified enterprise - wide risk appetite statements to acknowledge climate to date, although some are considering this. based on our observations, information flows and detailed climate reporting appear more prevalent at the management committee level rather than boards of directors. in terms of risk identification and management, some firms are beginning to assess how gradual changes in climate impact operational resilience and the potential for business disruption. several conduct periodic disruption simulations with predictive weather modeling as part of their resiliency programs. this work builds on experience managing risks posed by disaster events, including severe weather, to their operations and infrastructure such as branches, equipment and data centers. this includes updating disaster response playbooks and business continuity plans to address the resultant operational risks. in terms of credit and market risk, some firms are building

of the mid - term review of monetary and credit policy for the year 2003 - 04 has announced a number of initiatives to bring about a significant and enduring improvement in the functioning of the financial system. the financial sector now takes increasing challenges and complexities in the context of globalization and risk management. a standing technical advisory committee on financial regulation has been set up by the governor which, through a consultative process, will endeavour to simplify and rationalize the regulatory regime to move towards a clear and unambiguous framework. in another initiative, standing committee on procedures and performance audit on public services provided by the rbi is being set up to bench mark the current level of service and to enhance the timeliness and quality of these services. the committee will also coordinate with the ad hoc committee on customer services being set up by each bank. these initiatives would, it is expected, bring about a significant improvement in customer service in the financial sector. the central objective of financial reforms is to attain a significant improvement in the efficiency of financial intermediation and the endeavour of the rbi would be to provide a regulatory framework in which economic agents can perform their activities in an optimal manner. in this endeavour, the rbi would approach issues in a collaborative manner, and in this, seek the hand of market participants. i wish your deliberations all success.