Advancing research on financial stability and climate-related financial risk
2025-11-06
Climate change–related natural disasters such as floods, fires, and storms devastate communities, and their massive costs continue to grow. But as climate risks increase, financial risk management infrastructure is not keeping pace. Analytical tools on which investors, regulators, central banks, and governments depend were largely built for a 20th-century climate and a fossil fuel–dominated economy. Policy-makers need a sounder understanding of which climate-related risks pose a threat to the financial system and macroeconomy, as well as the potential channels through which those risks operate. Although the US government recently disbanded its main efforts to understand and address these risks, it is vital that such work continues. Climate change is not a distant environmental issue, but a present financial and macroeconomic concern that will affect all of us, whether we accept it or not.