and supervisors towards greening the financial system and managing climate - related risks. on the adaptation front, our contribution in the design of the national strategy on adaptation to climate change in 2015 has been of major importance in paving the way for adaptation measures. our current participation in the life - ip programme adaptivgreece, reinstates our commitment. a commitment, within the remit of our mandate and alongside central banks around the world, to act as a catalyst in the financial system, to accelerate the transition to an environment - friendly, carbonneutral economy and to enhance, through adaptation, society ’ s resilience to climate change risks. i hope we have an insightful and fruitful event. thank you. [ 1 ] adapt now : a global call for leadership on climate resilience [ 2 ] contribution by isabel schnabel, member of the executive board of the ecb, to the international monetary fund ’ s magazine finance and development, august 2021

current level. therefore, banks should not be surprised by the emphasis in the proposed cre guidance on concentrations and the importance of portfolio risk management. historically, cre has been a highly volatile asset class. in the past, problems in cre, even at wellmanaged banks, have generally come at times when the broader market was encountering difficulties. in an effort to generate cash flow, borrowers and bankers with properties in distress may disrupt their local real estate market by cutting rents or offering leasehold improvements and other incentives to attract or keep tenants. these actions can have a negative effect on the entire local real estate market, including good projects. in most years, cre credit losses are relatively low compared with many other types of bank loans. but in times of stress, the loss rate can jump considerably higher. because cre losses tend to be greater during times of stress, bankers must focus more intently on their risk appetite as their cre concentration grows. bankers must consider how much capital will be placed at risk if the cre portfolio hits a stress period and compare that loss exposure with the relative returns of cre lending. in other words, bankers need to practice risk management. while banks'underwriting standards are generally stronger than they were in the 1980s and 1990s, the agencies are proposing the guidance now to reinforce sound portfolio - management principles that a bank should have in place when pursuing a commercial real estate lending strategy. a bank should be monitoring performance both on an individual - loan basis as well as on a collective basis for loans collateralized by similar property types or in the same markets. some institutions'strategic - and capital - planning processes may not adequately acknowledge the risks from their cre concentrations. cre lending in recent years has occurred under fairly benign credit conditions, but those conditions are unlikely to continue indefinitely. the ability of banks with significant concentrations to weather difficult market conditions will depend heavily on their riskmanagement processes and their level of capitalization. from a risk - management and capital perspective, institutions should generally focus on the emerging conditions in their real estate markets and on the potential cumulative impact on their portfolios if conditions deteriorate ; they should also take other measures to help identify cre vulnerabilities. of course, these measures should vary according to the size of the organization and the level of the concentration. all of these steps are key elements of a sound strategy to manage concentrations. while supervisors continue to underscore the importance of having robust risk - management practices for