rising sea levels, growing weather variability, or changes in precipitation are all leading to physical risks. natural disasters are occurring nearly five times as often today as they were in the 1970s10. the cost of these events has been stark. globally, between 1970 and 2012, over 1. 9 million lives have been lost and economic damages of 2. 4 trillion usd suffered11. storms and floods accounted for nearly 80 per cent of the total number of disasters, caused over 50 per cent of deaths, and 84 per cent of economic losses12. the most direct link from physical risks to the financial system is through the insurance sector. insurance companies cover losses when these physical risks materialise. for example, 2017 recorded the highest insured losses ever for natural disasters, at 138 billion usd13. this risk of distress in the insurance sector will be bigger if insurance companies are unable to appropriately price and manage climate - related risks. this is complicated by the extent that models rely on historical data to assess the risk of 2 / 8 bis central bankers'speeches catastrophe. with climate change, the past is unlikely to be a good guide to the future. the dynamics of climate change also present a major challenge to modelling future impacts14. distress of insurers could in turn affect the financial system as a whole. this could occur through the interconnections with other parts of the financial system – like banks for example. or it could occur through the impact of behaviour on asset prices. but there is another manifestation of climate - related physical risks – a collective withdrawal of insurers from covering risks that they consider uninsurable. the international association of insurance supervisors ( iais ) shows that the insurance ‘ protection gap ’ for weather related losses is already significant, with roughly 70 per cent of losses uninsured in 201715. this raises risks of its own. if households and businesses cannot insure themselves against some of the physical risks, they will bear all the costs of climaterelated shocks. this reduces resilience. households and businesses may not be able to access finance in the first place, if investors judge that the risks stemming from climate - related events are too high. and it means that – when climate related shocks hit – the economic impact will be larger, due to underinsurance. take the simple example of property. households and businesses often use property as security for borrowing. if climate - related events hit – and households and businesses are underinsured – this will directly affect their net worth. this

i mean by ‘ amenity value ’? it includes many things, such as the benefits of reduced commuting time, greater ability to flexibly plan time use during the day, more autonomy in work, and less traffic - related stress. in the us, researchers have attempted to quantify these amenity values for workers and find that they range from around 1. 5 % to 7 % of earnings as you move up the pay distribution. 20 the potential impact on wages is via wage bargaining, as employers and employees increasingly bargain over the value of the option to work from home. the upshot is that increased working from home could be reflected in lower wage levels than would otherwise the case, with implications for wages, the distribution of market income and ultimately the labour share. these are, of course, essentially arguments about the wage level, as opposed to wage growth. beyond working from home, there are other forms of flexibility introduced in response to the pandemic which could impact the labour market. for example, we have highlighted more remote education or training opportunities as a potential force for increased labour force participation for certain groups. we already see this in the share of under 25s working whilst also ‘ in education ’ which, in recent quarters, has risen from pre - pandemic levels. we saw similarly high cyclical rates of youth labour force participation during the mid - 2000s. however, one important difference now is that more of these workers are combining both education and work, whereas before it was more a case of leaving education for work. sector shifts – that is, fewer construction workers – is likely part of the reason, in addition to greater opportunities for remote work and study. beyond the income benefits to these workers, there are also potential longerterm benefits in being able to combine both work and training. one is higher average labour market productivity. another is shorter unemployment durations in the event of a job separation, which could in - turn have implications for cyclical unemployment dynamics. … the outlook for wages the near - term outlook for wages depends on three inter - woven factors : ( 1 ) tightness of the labour market, and how it is expected to evolve ; and ( 2 ) how much, and over what time period, will employers adjust nominal wages to reflect the current bout of inflation – in other words, real wage catch - up, which itself also depends on tightness ; and ( 3 ) the future path for inflation and how this impacts inflation expectations and future wage demands.