New CWR Report! Futureproofing APAC Banks & Savings – Stress Test Right Today

by China Water Risk 7 November, 2022

7th November, 2022 – CWR releases new report, Futureproofing APAC Banks & Savings: Stress test right today, avoid hard landing from rising seas, which analyses the impact of rising seas on 17 major APAC banks from Australia, Hong Kong, Japan, Singapore and South Korea with loan books totalling US$7.9 trillion.

Analyses in the report show that rising seas could sink banks. Plus, geo-locational & sector-agnostic sea level rise (SLR) can over-ride traditional risk spread methods – the report reveals “triple whammy” concentrated risks.

With around US$5trn or almost two-thirds of loan books exposed to escalating SLR risks the report cautions APAC banks & central banks/regulators to stress test right today to stay afloat tomorrow.

Finance in APAC must wake up as the region is the most vulnerable with over 200mn people at risk from just 1m of SLR. But now the IPCC has warned that 2-3m of SLR by 2100 “cannot be ruled out”. There are significant impacts for 7 cities in the 5 countries/territories.

“Banks continue to severely under-estimate SLR risks because they are not stress testing right” said Mirando, lead author of the report. As the report shows: all paths to staying afloat starts with stress testing right.

As traditional risk management methods will not work to spread SLR risk, the report includes:

There’s also a Save Hong Kong Banks From Sinking factsheet and “Double Blind Maximum Risk” case study on Hong Kong to showcase additional exposure if both banks and governments use the wrong scenarios and timelines to stress test and adapt for SLR risks.

For more information on how rising seas will affect the 17 APAC banks from Commonwealth Bank of Australia and Mitsubishi UFJ Financial Group to HSBC, OCBC and KB Financial Group see the full report here; and the Executive Summary here.

To access the Press Release and Media Pack please click here.

“APAC banks must stress test right today because they are facing a lethal combination of:

1) a “triple whammy” from loan books clustered in vulnerable domestic and regional locations, and sectors;

2) accelerating SLR risks, and

3) lack of government adaptation action, which could trigger financial systems collapse if not addressed immediately.”

Dharisha Mirando, lead author 

“At 1.2°C of warming today, our 2100 climate future is already here…

We are playing catch up with impacts – to get ahead, we must make adaptation a top priority; as it is we’re 70 years late”

“…all paths to financial resilience starts with stress testing right today … futureproofing the financial sector against SLR risks requires banks and governments to align their adaptation strategies”.

Debra Tan, Head & Director CWR