Siti Nurul Ain Zakaria
I chose the dissertation option for my MASc capstone project, entitled "Effective regulatory framework as impetus towards a sustainable and resilient financial system". Driven by my interest and working experiences in the financial regulation sector prior to joining the MASc programme, this dissertation aims to understand how have financial regulators globally responded to the threats of climate change on the financial system soundness and stability.
This dissertation mainly analyses climate-related financial policy frameworks of six countries of interest namely the UK, Germany, France, China, Singapore and Malaysia. It aims to understand the element of commonalities and differences in the approach taken by financial regulators such as the central banks and supervisors in refining their financial frameworks to future-proof their respective financial institutions against major climate-related financial risks such as the transition and physical risks.
Given the large scale of financial assets exposures to the climate change, majority of financial regulators globally have taken the steps to refine their financial policy frameworks. This includes measures in ensuring the financial soundness of the financial institutions remain intact against the threats. Among key focus areas and the top priority include climate-related risk management framework, and introduction of green taxonomy to encourage financial institutions in classifying their financial assets by exposures to climate threats. International cooperation among financial regulators and the international standard setting bodies such as the Bank for International Settlement (BIS), the Financial Stability Board (FSB) and the Network of Central Banks and Supervisors for Greening the Financial System (NGFS) among others is also a key fundamental identified in ensuring a smooth and orderly transition journey of financial institutions towards becoming more sustainable and resilient.
Future research aspirations
I am interested to further understand the climate-risk management aspects of the financial institutions such as the technical mechanism for stress-testing against climate-related risks procedures. This is driven by the fact that this type of risk is unprecedented in nature and unique in behaviour which may require different risk management modellings, unlike other conventional type of risks faced by the financial institutions.