marja nykanen : opening remarks speech by ms marja nykanen, deputy governor of the bank of finland, at the conference on systemic risk analytics, 1 july 2021. * * * ladies and gentlemen, on behalf of the bank of finland and other organisers of this conference i would like to welcome you all to this year ’ s conference on systemic risk analytics. despite the ongoing covid - 19 pandemic, we have been fortunate to receive several excellent papers this year. a big thanks to the organising team for making this conference happen and to everyone who submitted their papers – without your efforts this conference would have not been possible. the focus in financial analysis is changing from looking at issues in the rear - view mirror towards a more forward - looking approach. in my opinion, it is important that we find the right balance between the two. it is important to learn from the past, but it is equally important to prepare for the future. this will be a central theme throughout the conference. in this opening speech i will be highlighting two challenges that we have in financial analysis related to climate change, and i will propose two solutions. but these are general issues and relevant not only in the case of climate change ; instead, they exemplify the challenges that we also face in many other fields. the first challenge is that financial analysis related to climate change is a relatively new topic in our field. this means that the analytical methodologies and relevant data are still in their infancy. the first lessons learned in this process have been that traditional methodologies and data are inadequate for financial stability analysis related to climate change. climate change is not evident in past data ; instead, we need data to cover the future. similarly, we require information beyond financial disclosures. and in many cases, comparable and reliable data does not even exist. the same goes for analytical methods. climate change needs forward - looking approaches with a time horizon in the range of several decades instead of a couple of years. our financial models need to be complemented with non - financial information. what are known as integrated assessment models, thus far used in much of financial climate analysis, are a good start. but to really make progress, we may need to be able to integrate the climate into the traditional central bank forecasting models to make climate issues more relevant to macroeconomic analysis. the second challenge is a lack of expertise. the relevant analytical knowhow is rare, as this topic has not been included in the mainstream economics or

part of economics or finance in the universities. but we need solid research foundations upon which to build our models ; hence, this situation needs to change. and we at the central banks must play our part in taking this discipline forward. after all, it is in our own interest to be able to assess the financial stability impact of climate change as well as the climate risks posed on our own balance sheets. we need to lead the way. and leading the way is what this conference has always been about. the systemic risk analytics conference has always taken onboard excellent papers that are innovative in terms of their approach and topic. to continue this tradition, i was delighted to see what we have on the agenda at this year ’ s conference. for what i see in the presentations is a lot of novel thinking and new approaches to analysis. these are the kinds of action we need in order to take things forward, which is a necessity, given the tasks ahead. i hope that the presentations in this conference give you ideas on how to extend your thinking beyond the traditional approaches. and i hope this in turn helps you to develop new approaches that might take your own field of research forward. so, i wish you all a fruitful conference. 2 / 2 bis central bankers'speeches