On 9 February 2022, the Bank of England (BoE) launched the second round of the Biennial Exploratory Scenario (BES) exercise on financial risks from climate change.
The exercise has three main objectives:
- Size the financial exposures of participants and the financial system more broadly to climate-related risks.
- Understand the challenges to participants’ business models from these risks; and gauge their likely responses and the implications for the provision of financial services.
- Assist participants in enhancing their management of climate-related financial risks. This includes engaging counterparties to understand their vulnerability to climate change.
The second round will focus primarily on the second objective and will further explore participants’ strategic responses to the three scenarios published as part of the first round in June 2021 and the associated implications for their business models. The deadline for participants’ second round submissions will be 31 March 2022 and the BoE expects to publish results in May 2022.
The second round will comprise a small number of questions, which will further explore participants’ strategic responses to the three scenarios published as part of the first round and the associated implications for their business models. Participants will not be required to update the quantitative loss projections they provided as part of the first round of the exercise. All climate BES participants are taking part in the second round.