Addressing recent calls by European regulatory and supervisory authorities, we develop a new bottom-up climate risk … default risk of STOXX Europe 600 firms. For about 5% of the sample firms, we find asset devaluation shocks larger than 30% and … stress test on credit risk based on these results, we find a decrease in capital ratios between $$-1.2$$and $$-1 …

; (iii) a novel set of climate-specific models to capture the direct and indirect transmission channels of climate risk …

Stress testing has become a tool of choice in banking for risk managers and regulators alike, and it is used more … widely as a way to assess resilience to severely adverse events. Yet even the most creative risk manager would have been …

management of transition risk exposures. Banks that signed the Net-Zero Alliance have reduced their exposures compared to non …

), the higher its transition risk. Recent Hungarian trends of this indicator alerts to significantly regrowing risks. …

without specific climate prudential policies, transition risk can generate excessive risk-taking by banks, which in turn … enough to account for the systemic dimension of transition risk. Implementing macroprudential policies in addition to …

global financial stability. Consequently, various risk detection tools alongside capital adequacy and liquidity measures …