Japanese
June 20, 2025
Updated on July 29, 2025
Financial Services Agency
Bank of Japan

Release of “The Second Scenario Analysis on Climate-Related Risks(Banking Sector)”

The Financial Services Agency (FSA) and the Bank of Japan (BOJ), in collaboration with three major banks, conducted the second scenario analysis on climate-related risks. The FSA and the BOJ have published a report “The Second Scenario Analysis on Climate-Related Risks (Banking Sector)”, which outlines major findings, and issues and challenges drawn from the exercise. 

As with the first scenario analysis (“Pilot Scenario Analysis Exercise on Climate-Related Risks Based on Common Scenarios”), the aim of the second scenario analysis was not to quantitatively assess the impact of climate-related risks, but to identify areas for future improvement. The analysis assessed the impact on loans (credit risk), which potentially has a large impact on banks' financial conditions. The analysis focused on transition risk analysis, considering the impact over a shorter time horizon (7 years) compared to the first scenario analysis. The FSA and the BOJ included a tailored stress scenario by modifying an NGFS scenario. 

The analytical capability has been further enhanced in the participating banks since the first scenario analysis (e.g., widened coverage of analysis by sector-specific models and improved model documentation). The FSA and the BOJ conducted in-depth dialogues with the banks on issues regarding the use of scenario analysis, exploiting the horizontal review of submitted analysis from the banks.

Going forward, the FSA and the BOJ will continue to engage in discussions with financial institutions regarding methods and applications of scenario analysis, including how to address the issues identified in the first and second scenario analyses.

• The Second Scenario Analysis on Climate-Related Risks (Banking Sector)
• The Second Scenario Analysis on Climate-Related Risks (Banking Sector) (Summary)
• The Second Scenario Analysis on Climate-Related Risks (Banking Sector) (Japanese)

Contact

Financial Services Agency
Macro-financial Stability and Data Strategy Office
Strategy Development and Management Bureau
Tel +81-(0)3-3506-6000（ext.2794）

Bank of Japan
Financial System and Bank Examination Department
Tel +81-(0)3-3279-1111（ext.2933）