STRESS TESTING PORTFOLIOS AND ECONOMIC MODELING
Last month, the Bank of Canada and OSFI released results of a pilot project on climate scenario analysis. The scenarios were designed to capture a range of potential outcomes and illustrate the kinds of stresses on the financial system and economy that could occur as Canada and the rest of the world transitions to a low-carbon future. The scenarios are intended to supplement economic modeling with an aim to help financial service firms identify, measure, and where possible, mitigate climate-related risks.