ECB's Elderson says climate stress tests cover all material risks in 15% of cases

Frank Elderson used a keynote at the ECB-Bank of England conference on supervising climate risk to sort climate and nature risks into known knowns, known unknowns and unknown unknowns. The core supervisory message: scenario analysis is indispensable but incomplete, and banks remain early in integrating these risks into core models. The speech extends the same logic to AI, quantum computing and demographic shifts.

• Elderson said climate stress tests and scenario analysis in the ICAAP cover all the risk drivers banks deem material in only around 15% of cases.
• The average share of interest income from carbon-intensive sectors at significant supervised banks has remained above 70% since 2022.
• The 2026-28 supervisory priorities treat heightened uncertainty as a cross-cutting challenge raising the likelihood of extreme tail risks.
• Elderson extended the climate framework to AI-enabled cyber risk and to quantum computing's 'harvest now, decrypt later' threat to cryptography.

Executive summary

Frank Elderson, ECB Executive Board member and Vice-Chair of the Supervisory Board, opened the joint ECB-Bank of England conference on supervising climate risk in Frankfurt on 14 October 2026, bringing together experts from 18 countries and three continents. He argued…

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