Sam Woods, Head of UK’s Prudential Regulation Authority, is urging the Bank of England to assess the resilience of the financial sector against sudden extreme climate events. The PRA has already tested how lenders would cope with a slow-burn scenario over 30 years but has yet to conduct a full stress test for a large and rapid onset climate event. Woods is calling for testing to determine the potential effects on the financial stability of the UK, and to include scenarios such as “Westminster under water”. The Bank of England has faced criticism for not disclosing individual test results, not implementing climate capital requirements, and not updating its risk calculations.
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