Water underpins human well-being, economic development and environmental sustainability. Yet the planetary boundary for freshwater was crossed decades ago, as rising pressures degrade both quantity and quality. Scarcity, flooding, pollution and ecosystem degradation now drive mounting risks to economies and financial systems. These shocks are increasingly frequent, severe and interconnected, with impacts that cut across sectors and borders. Financial authorities are recognising water as a distinct component of climate- and nature-related financial risks.

In what ways are water-related risks distinctive among nature related financial risks? How should water-related risks be integrated into financial stability assessments and financial supervision? How can collaboration between policy makers, financial authorities, academia and environmental agencies be strengthened to refine risk assessments?

We unpacked these questions during the OECD Green Talks LIVE for the launch of the new OECD report Embedding Water-related Risks in Financial Stability Frameworks. This report aims to support these efforts by equipping financial authorities with practical guidance, tools and frameworks for integrating water-related risks into financial supervision. It highlights the uniqueness of water-related risks, the ways these transmit to financial systems and the limitations of current models and data.

Following a presentation of its key findings, senior policymakers and central bankers discussed the OECD’s latest recommendations and recent advances in prioritising water-related risks and building resilience.

The webinar was moderated by Mathilde Mesnard, Deputy Director of the OECD Environment Directorate.