, we see a clear need to reduce the substantial divergence currently observed across institutions. the bank is exploring various options to encourage better risk management approaches by outlier institutions – including through pillar 2 capital requirements and supervisory assessments to reflect an inadequate consideration of climate risks. building on the implementation of the principles - based taxonomy and the work by jc3 to address data gaps, the bank ’ s financial stability committee has recently endorsed a four - year plan to prepare for industry - wide climate change stress tests at the counterparty level. this work is supported by efforts internally within the bank to model the macroeconomic impact of climate shocks based on defined climate scenarios. and we will be taking further concrete steps to improve transparency on the management of, and exposures to, climate - related risks in the financial sector. to this end, bank negara will finalise plans this year for mandatory climate - risk disclosures by financial institutions in consultation with the financial industry. let me conclude. climate change is an unprecedented challenge. the economy and society cannot be separated from the environment and our actions have to be cognisant of this. while we are making progress, there remains considerable scope for the financial sector to be more deliberate in considering the impact of climate change on risks and strategy. there is significant potential for the financial sector to provide guardrails for economic activities to stay on the path towards a low carbon and climate - resilient economy, and in doing so, avoid a more destructive path that will inflict untold harm on current and future generations. the dutch businessman, paul polman, once said “ climate change is sometimes misunderstood as being about changes in the weather. in reality it is about changes in our very way of life ". financial institutions must take a deeper interest not just in how changes in the weather can affect them, but importantly, in how they affect the weather. the path to a more sustainable future depends on it. thank you. 1 aeon weather, climate & catastrophe insight : 2020 annual report ( back ) 2 aeon weather, climate & catastrophe insight : 2020 annual report ( back ) 4 / 5 bis central bankers'speeches 3 grantham research institute on climate change and environment ( back ) 4 www. accenture. com / us - en / insights / strategy / green - behind - cloud? c = acn _ glb _ sustainabilitymediarelations _ 11307639 & n = mrl _ 0920 ( back ) 5 www. unepfi.

demand for shariah - compliant products - by extending takaful coverage to underserved segment of society and embedding new features and services that aligns with a muslim's religious needs ( for example, badal hajj, waqf and charity ). these differentiators, which are commendable, should be further scaled up and further diversified. exploration of more distinctive business models are envisaged, such as social blended takaful through the use of private and social funds complemented by targeted financial and risk management programmes. this is similar to the blended finance in the banking side. in driving differentiation and value - based innovation, digital technology should be harnessed, and this is where the industry should make full use of the conducive regulatory environment provided through the regulatory sandbox and 2 / 4 bis - central bankers'speeches digital insurance and takaful operator ( dito ) framework – where we recently concluded the public consultation on the exposure drafts and in the process of finalising the policy documents. we at bank negara malaysia are keen to facilitate emerging innovative business models by new entrants and incumbents through these initiatives. the second priority is on self - governance and best conduct, to align the organisation's strategic orientation with shariah values. the last sermon by prophet muhammad ( peace be upon him ) serves as a reminder. he said, " - so regard the life and property of every muslim a sacred trust - ". within the context of takaful business, this underscores the importance of takaful operators to have good management of takaful business, based on the amanah ( trust ) provided by the contributing participants and society at large. complementing the amanah and ihsan principles as a standard of excellence provides an ethical framework to drive the best of conduct, an area often overlooked in the pursuit for profit. the integration of shariah principles, maqasid shariah and vbit across the value chain and in managing the takaful funds, is not only expected but crucial for the industry's advancement. takaful industry must be steadfast in upholding expectations by acting in the best interest of takaful participants and recognising the role of takaful operator as manager ( wakeel ) with fiduciary responsibilities. takaful operators should also not lose sight of the vital importance of having robust control function. this ensures continuous enhancements