liquidity risks. crucially, we have no need to await regulatory developments before formulating our expectations for the management of climate - related risks. they are firmly grounded on actual requirements and stem from the simple fact that climate - related risks are on the rise and need to be tackled seriously by the whole financial sector. incorporating climate - related risks into ongoing supervision and stress testing this is why we have already asked banks to conduct a self - assessment against the supervisory expectations outlined in our guide and draw up action plans for aligning their practices to them. the assessment covers 112 institutions, representing 99 % of total assets under our direct supervision. all banks have already handed in their self - assessments and are now finalising their action plans. we are currently assessing banks ’ submissions and will be challenging them in all of these areas. where we see that banks are not managing their exposures to climate - related risks in an adequate manner, we can and will draw on the full supervisory toolkit at our disposal to correct that situation. just as we do for any other material risk. we have already started work on incorporating climate - related risks into our supervisory review and evaluation process ( srep ) methodology. this year the outcomes of these assessments will not be translated into quantitative capital requirements across the board, but we may impose qualitative or quantitative requirements on a case - by - case basis. we expect that the actions we are taking in 2021 will result in banks being adequately prepared for the full supervisory review which we will conduct in 2022. currently, the ecb is also carrying out a stress test to assess the impact of climate - related risks 3 / 5 bis central bankers'speeches on the european banking sector over a 30 - year horizon. 8 we will map projections of climate patterns and expected climate developments to the location of firms ’ physical assets and estimate the impact that severe climate events would have on those assets and, consequently, on banks ’ portfolios. together with other central banks, we are developing joint climate stress test scenarios. besides allowing us to conduct an in - depth investigation into banks ’ internal practices around climate risk stress testing for the first time ever, the stress test will help us catalogue the resilience of banks ’ balance sheets to risks coming from climate change. importantly, this exercise will push banks to strengthen the climate dimension of their risk management toolbox. finally, the exercise will also dramatically increase the availability of data and shed light on our supervisory reporting needs around these types of risks. given our

yves mersch : risk management in times of non - conventional monetary policy keynote speech by mr yves mersch, member of the executive board of the european central bank, at the joint bank of portugal and european central bank conference on “ risk management for central banks ”, lisbon, 25 september 2017. * * * let me start by thanking you for coming to this joint ecb - banco de portugal conference, and the banco de portugal for hosting us on this occasion. i am delighted to see central bank risk managers, practitioners and academics here in lisbon to exchange views on risk management for central banks. this topic has gained such importance in recent years as central banks across the globe, including the ecb, have sharply expanded their balance sheets, even though the time for ever more of the same is behind us. like the many great maritime expeditions that started out from this country, some of our endeavours in recent years have taken us into uncharted territory. now is a good time to take stock of what we have learnt and map out what may come next. following stable principles in the eurosystem ’ s risk management framework the eurosystem has a clearly defined objective, enshrined in the treaty, to preserve price stability in the euro area. 1 the treaty does not speak of eligible counterparties, collateral haircuts or issue share limits for bond purchases. however, you would be mistaken in assuming that managing financial risks has no role in the eurosystem ’ s monetary policy implementation – especially in the light of the significant balance sheet expansion over the past few years. on the contrary, we have applied the guiding principles of our financial risk management framework in a stable manner. we established these principles long before we embarked on non - conventional policies, not least because we have a statutory obligation to lend only against adequate collateral. we continue to apply them to standard as well as non - standard policy measures. broadly speaking, these principles are protection, consistency, simplicity and transparency. this means that – if multiple monetary policy options exist to fulfil our mandate – we should select the measures that minimise our own exposure to financial risks. this idea is sometimes referred to as risk efficiency. these principles also imply that we aim to avoid undue distortions in the markets in which we operate. we trade at market prices and we adopt a risk - equivalent approach in setting our risk control measures. in addition, the principles require risk management to be an integral part of decision - making in the institution