Banks fold climate, pandemic and cyber risks into CCAR

OpRisk North America: anchoring idiosyncratic risks to macro scenarios a challenge, say experts

Banks have long faced an uphill task to accurately gauge the financial risks posed by climate change, pandemics and cyber attacks, and to put a dollar value on them for the purpose of capital planning. But while such risks have previously been treated as tail events, the coronavirus has made clear they can significantly affect the losses firms have to project as part of regulatory-mandated stress-testing.

“We’ve incorporated a lot of these risks into our scenarios from a CCAR [Comprehensive