insurance losses, seem to be getting more frequent and the chance of two or more intense hurricanes occurring close together all speeches are available online at www. bankofengland. co. uk / speeches may be higher than previously thought. so improvements in insurers ’ risk modelling must be unrelenting. while the ability to re - price annually or to withdraw cover can mitigate risks to general insurers in the short - term, as climate change progresses, they will need to consider the longer - term impacts on their business models. and as the pra found a few years ago in its review of the sector, insurers need to be wary of cognitive dissonance within their organisations whereby risks that are managed prudently by their underwriters are ignored by the firm ’ s asset managers, such as in their real estate exposures. consistent with the tragedy of the horizon, the risks posed to banks from climate change have tended to be beyond their planning horizons. a recent survey by the pra of banks accounting for around 90 % of the uk banking system, found that these horizons averaged four years – before physical and litigation risks would be expected to manifest, and prior to stringent climate policies likely taking effect. there are signs, however, that banks are beginning to treat climate - related risks like other financial risks. the pra survey finds that a majority of banks now see them as financial risks – rather than just a reputational or corporate social responsibility issues. as such, oversight of climate - related risks and overall responsibility for setting the climate risk strategy, targets and risk appetite has been elevated to board level. banks have begun considering the most immediate physical risks relevant to their business models – from the exposure of mortgage books to flood risk or, for globally active banks, the impact of extreme weather events on country risk. and they have begun to assess exposures to transition risks where government policy is already pulling forward the adjustment. this includes exposures to carbon - intensive sectors, consumer loans secured on diesel vehicles and buy - to - let lending given new efficiency requirements. but many banks have indicated that there is some way to go to identify and measure climaterelated risks more comprehensively, including given the need to improve data and expertise. this includes developing their approaches to stress testing for climate - risks as well as, over longer horizons, more dynamic scenario analysis. it is clear, however, that the tcfd framework is helping, including to identify metrics and promote use of

broadly, and like the other financial authorities represented here today, we recognise the value in sharing expertise and best practice to increase the rate at which firms, and indeed ourselves as regulators, move to embed more thoroughly climate - related financial risks into our risk assessment and mitigation. https : / / www. bankofengland. co. uk / prudential - regulation / letter / 2017 / general - insurance - stress - test - 2017 - feedback this included co - hosting a conference with tcfd in late 2017. for further details see : https : / / www. fsb - tcfd. org / event / tcfd - boeconference - climate - scenarios - financial - risk - strategic - planning / all speeches are available online at www. bankofengland. co. uk / speeches conclusion given this heavy agenda, it is encouraging that central banks and supervisors – from eight countries that together account for over a third of both global financial assets and carbon emissions – have come together to found the network for greening the financial system ( ngfs ) to take forward coordination. there are, however, limits to our roles. financial policymakers will not drive the transition to a lowcarbon economy. our efforts cannot substitute for those of governments who have direct responsibilities to deliver the policies to achieve their paris commitments. the good news is that governments are now establishing the policy frameworks, and the private sector is beginning to allocate capital accordingly. our efforts will help smooth the transition prompted by these actions. with better information and risk management as the foundations, a virtuous circle is being built with better understanding of tomorrow ’ s risks, better pricing for investors, better decisions by policymakers and a smooth transition to a low carbon economy. financing the transition to a low carbon economy is a major opportunity for investors and creditors. it implies a sweeping technological revolution, including investments in long - term infrastructure at roughly quadruple the current rate. as this event testifies, climate finance and risk management is moving into the mainstream. there has been a transition in thinking. and this is now beginning to be translated into action, and the ngfs will play an important role in this. all speeches are available online at www. bankofengland. co. uk / speeches