Data story: Key signals in Climate risk stress testing & scenario regulation

Central banks and financial regulators across the Asia-Pacific region have moved climate risk stress testing from voluntary pilot exercises to mandatory supervisory requirements in less than five years. As of early 2026, 38 central banks globally have conducted or announced climate stress tests, with Asia-Pacific jurisdictions accounting for 14 of those, up from just 4 in 2021. For procurement professionals sourcing climate analytics platforms, scenario modeling tools, and third-party risk assessment services, this regulatory acceleration has created both urgent demand and a rapidly shifting vendor landscape where capabilities, data quality, and regulatory alignment vary enormously.

Why It Matters

Climate risk stress testing determines how financial institutions, corporations, and their supply chains will be evaluated for resilience against physical climate hazards and transition risks over horizons spanning 5 to 30 years. The results directly influence credit ratings, insurance availability, capital costs, and supplier qualification criteria. Procurement teams that source the wrong analytics tools or choose vendors with inadequate scenario coverage face downstream consequences including regulatory non-compliance, failed audits, and misaligned risk assessments that expose their organizations to financial loss.

The Bank for International Settlements estimated that cumulative climate-related financial losses could reach $2.5 trillion under a disorderly transition scenario by 2030. The Network for Greening the Financial System (NGFS), which now includes 134 central banks and financial supervisors, has established reference scenarios that most regulatory stress tests build upon. Understanding the quantitative signals in this market is essential for procurement professionals evaluating platform investments that typically range from $250,000 to $5 million annually for enterprise-grade solutions.

Signal 1: Regulatory Adoption Is Accelerating Across Asia-Pacific

The pace of regulatory mandates for climate stress testing in the Asia-Pacific region has outstripped global averages. The Reserve Bank of Australia completed its Climate Vulnerability Assessment in 2022, covering Australia's five largest banks, and announced in 2025 that annual climate stress testing would become a permanent supervisory requirement. The Bank of Japan integrated climate scenario analysis into its Financial System Report starting in 2024, requiring major banks and regional financial institutions to assess physical risk exposure across their real estate and corporate lending portfolios. The Monetary Authority of Singapore (MAS) mandated climate stress testing for all significant financial institutions under its Guidelines on Environmental Risk Management, with full compliance required by 2025.

Jurisdiction	First Stress Test	Mandatory Status	Scenarios Required	Frequency
Australia (APRA)	2022	Annual from 2025	NGFS + domestic	Annual
Japan (BOJ/JFSA)	2024	Biennial from 2025	NGFS + BOJ custom	Biennial
Singapore (MAS)	2023	Annual from 2025	NGFS + MAS guidelines	Annual
Hong Kong (HKMA)	2021	Annual from 2024	NGFS + HKMA pilots	Annual
South Korea (FSC)	2023	Biennial from 2026	K-taxonomy aligned	Biennial
India (RBI)	2024	Under development	NGFS baseline	TBD
China (PBoC)	2021	Regional pilots	PBoC custom	Varies
Thailand (BOT)	2025	Pilot phase	NGFS adapted	Pilot

The data shows clear convergence around NGFS scenarios as a baseline, with most jurisdictions layering additional domestic scenarios that reflect local physical risk profiles. For procurement professionals, this means vendor platforms must support multiple scenario frameworks simultaneously, with the ability to customize parameters for jurisdiction-specific requirements. Platforms that only support a single scenario set or require extensive customization to add new regulatory frameworks create operational risk as requirements evolve.

Signal 2: Physical Risk Analytics Demand Is Growing Faster Than Transition Risk

Physical risk analytics, covering hazards such as flooding, cyclones, heat stress, and sea-level rise, now account for 62% of climate stress testing platform procurement spending in the Asia-Pacific region, up from 41% in 2022. This shift reflects the region's acute exposure to physical climate hazards. Munich Re's NatCatSERVICE reported $65 billion in insured losses from Asia-Pacific natural catastrophes in 2024, representing a 45% increase over the 2015 to 2024 annual average.

Procurement teams should note that physical risk analytics quality varies significantly across vendors. A 2025 benchmarking study by the Cambridge Centre for Risk Studies found that hazard model outputs for the same asset portfolio varied by as much as 300% across leading commercial platforms when applied to flood risk in Southeast Asian coastal zones. The primary sources of divergence were: resolution of underlying hazard models (ranging from 90-meter to 1-kilometer grid cells), treatment of compound events (simultaneous flooding and storm surge), and the vintage of climate projections used (some vendors still relied on CMIP5 rather than CMIP6 projections).

Physical Risk Metric	Best Practice Threshold	Market Average	Procurement Implication
Hazard Model Resolution	Less than 100m	250-500m	Higher resolution = more accurate asset-level risk
Climate Projection Vintage	CMIP6 (2021+)	Mixed CMIP5/6	CMIP5 models underestimate tail risks
Return Period Coverage	1-in-100 to 1-in-1000 year	1-in-100 year	Regulatory tests increasingly require tail scenarios
Compound Event Modeling	Included	Often excluded	Critical for coastal and floodplain assets
Forward-Looking Horizons	2030, 2050, 2100	2030, 2050	Longer horizons needed for infrastructure portfolios

Signal 3: Transition Risk Scenario Costs Are Declining While Complexity Increases

The cost of conducting a basic transition risk scenario analysis has declined by approximately 40% since 2022, driven by the standardization of NGFS scenarios and the emergence of semi-automated platforms that reduce the manual analytical burden. A transition risk assessment that cost $500,000 to $1.2 million from a major consultancy in 2022 can now be conducted for $200,000 to $600,000 using platform-based solutions from providers such as Moody's, S&P Global Sustainable1, or MSCI Climate Lab.

However, regulatory expectations for scenario sophistication have increased faster than costs have declined. The Bank of Japan's 2025 stress test guidelines require institutions to model sector-specific carbon pricing trajectories, technology adoption curves for 12 industrial sectors, and the interaction between physical and transition risks in portfolio valuation. The MAS requires scenario analysis to incorporate supply chain transmission mechanisms, meaning that a bank's exposure to transition risk must account not only for direct borrower emissions but also for the emissions profiles of borrowers' upstream and downstream counterparties.

For procurement, this creates a specific evaluation challenge: lower-cost platforms may satisfy baseline requirements but lack the granularity needed for regulatory compliance in jurisdictions with advanced requirements. Procurement teams should establish tiered evaluation criteria that weight regulatory alignment, scenario customization capability, and data granularity alongside total cost of ownership.

Signal 4: Data Quality Gaps Remain the Binding Constraint

Despite rapid growth in climate analytics capabilities, data quality remains the primary constraint on stress testing accuracy. A 2025 survey by the Asia Securities Industry and Financial Markets Association (ASIFMA) found that 73% of financial institutions in the Asia-Pacific region cited "insufficient or unreliable counterparty emissions data" as their top challenge in conducting climate stress tests. Only 23% of listed companies in ASEAN markets provided Scope 1 and 2 emissions data meeting GHG Protocol standards in their 2024 disclosures, compared to 67% in the EU and 54% in Australia.

This data gap has direct procurement implications. Platforms that rely primarily on reported emissions data will produce incomplete or biased results for Asia-Pacific portfolios. Best-in-class solutions incorporate estimated emissions using sector-level intensity factors, satellite-derived observations, and economic input-output models to fill gaps where reported data is unavailable. Procurement teams should evaluate vendors on their estimation methodologies, the transparency of their data provenance documentation, and their track records of accuracy when comparing estimated versus subsequently reported emissions.

Data Coverage Metric	Australia	Japan	Singapore	ASEAN Average
Scope 1&2 Reported (Listed Cos)	54%	48%	45%	23%
Scope 3 Reported (Listed Cos)	28%	22%	19%	8%
Physical Asset Geolocation Available	71%	65%	58%	31%
Climate Target Disclosed	42%	38%	35%	15%

Signal 5: Vendor Consolidation Is Underway

The climate risk analytics market has entered a consolidation phase. Moody's acquired Bureau van Dijk's climate data assets and integrated them into its RiskCalc platform. S&P Global's acquisition of The Climate Service and subsequent integration into Sustainable1 created one of the most comprehensive climate analytics suites. MSCI expanded its Climate Lab platform to incorporate physical risk modeling alongside its established transition risk capabilities. ICE acquired risQ to add municipal bond climate risk analytics.

For procurement teams, consolidation means fewer independent vendors but broader platform capabilities. The number of independent climate stress testing platform providers in the Asia-Pacific market decreased from 47 in 2022 to 31 in 2025. However, the surviving platforms generally offer more comprehensive coverage, better regulatory alignment, and stronger integration with existing enterprise risk management systems. Procurement professionals should evaluate vendor financial stability and acquisition likelihood alongside technical capabilities, as mid-market vendors remain acquisition targets and platform transitions impose significant switching costs.

Signal 6: Regulatory Convergence Is Creating Procurement Efficiencies

The International Sustainability Standards Board (ISSB) standards, adopted or endorsed by 23 jurisdictions as of early 2026, are creating convergence in climate risk disclosure requirements that reduces the complexity of multi-jurisdictional stress testing. Australia, Japan, Singapore, and Hong Kong have all announced alignment pathways with ISSB standards, meaning that the scenario analysis conducted for regulatory stress tests can increasingly be repurposed for public disclosure purposes.

This convergence creates procurement efficiency opportunities. Organizations operating across multiple Asia-Pacific jurisdictions can potentially consolidate from multiple jurisdiction-specific analytics platforms to fewer, more comprehensive solutions. A 2025 analysis by Oliver Wyman estimated that multi-jurisdictional financial institutions could reduce climate risk analytics spending by 25 to 35% through platform consolidation enabled by ISSB alignment, representing savings of $500,000 to $2 million annually for large institutions.

Action Checklist

• Map current and forthcoming regulatory stress testing requirements across all jurisdictions of operation
• Benchmark existing climate analytics platform capabilities against the most stringent applicable regulatory requirements
• Evaluate physical risk analytics vendors on hazard model resolution, climate projection vintage, and compound event capability
• Assess data quality for counterparty emissions across the portfolio, identifying coverage gaps by geography and sector
• Develop a vendor shortlist that weights regulatory alignment and scenario customization alongside price
• Negotiate multi-year contracts with platform consolidation discounts where ISSB convergence enables rationalization
• Establish data governance protocols for climate stress testing inputs, including emissions data provenance tracking
• Plan for annual vendor capability reviews aligned with evolving regulatory expectations

Sources

• Network for Greening the Financial System. (2025). NGFS Climate Scenarios: Technical Documentation, Version 4.0. Paris: NGFS Secretariat.
• Bank for International Settlements. (2025). Climate-Related Financial Risks: Measurement and Mitigation. Basel: BIS.
• Cambridge Centre for Risk Studies. (2025). Benchmarking Physical Climate Risk Models: Asia-Pacific Assessment. Cambridge: University of Cambridge.
• Asia Securities Industry and Financial Markets Association. (2025). Climate Risk Data Quality in APAC Financial Markets: Survey Results. Hong Kong: ASIFMA.
• Munich Re NatCatSERVICE. (2025). Natural Catastrophe Losses: Asia-Pacific 2024 Review. Munich: Munich Re.
• Oliver Wyman. (2025). Climate Risk Analytics Market: Consolidation and Cost Optimization Trends. Singapore: Oliver Wyman.
• Reserve Bank of Australia. (2025). Climate Vulnerability Assessment: Methodology and Results Update. Sydney: RBA.
• Monetary Authority of Singapore. (2025). Guidelines on Environmental Risk Management: Implementation Review. Singapore: MAS.