In an opening address to the Green Swan Conference, Bank of Italy Governor Fabio Panetta called for a three-part approach to climate resilience that improves the measurement of physical risks, expands mechanisms for absorbing losses and increases investment in adaptation. He emphasized that governments retain primary responsibility for climate policy, while central banks and supervisors must account for climate effects on inflation, economic activity and financial stability within their existing mandates. Extreme weather caused more than USD 200 billion in direct damage in 2025, more than double the level in the early 2000s. Panetta said financial institutions should integrate climate risks into governance, internal controls and their assessment of credit, market, operational and insurance risks, rather than treat them as a separate compliance exercise. To narrow the natural catastrophe protection gap, he advocated a layered framework combining private insurance, reinsurance, public backstops and capital market instruments. Coverage should remain affordable, pricing should reflect risk and public support should preserve incentives for prevention. Adaptation investment should reduce exposure before disasters occur, particularly in emerging market and developing economies where high physical risk and limited fiscal capacity can reinforce a cycle of climate damage and rising debt. Governments can support resilient infrastructure and clearer standards, while multilateral development banks can use guarantees, blended finance and other risk mitigation tools to attract private capital. Panetta also highlighted the potential of artificial intelligence and other technologies to improve risk modelling, forecasting and early warning systems, while cautioning that they cannot replace reliable data, sound models or human judgment.

Original source