ContextOpening address at the Green Swan Conference 2026 in Manila, co-hosted by the BIS, the Philippine central bank, Banca d'Italia and the NGFS; the Bank of Italy safeguards price and financial stability.
Why it mattersSets out a resilience agenda built on better data, layered insurance and adaptation spending, and says central banks must meet their existing mandates under climate uncertainty rather than widen them.
- Climate shocks already drain productivity and capital and strain public budgets.
- Much disaster loss is uninsured, leaving households, firms and states exposed.
- Adaptation is underfunded, trapping high-debt, high-risk countries in a climate-debt spiral.
- Improve climate data and weave climate risk into banks' own risk management.
- Build layered insurance: private cover, reinsurance, public backstops and catastrophe bonds.
- Invest in adaptation, drawing private capital through credible policy and development bank guarantees.
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1. Why resilience matters now
Opening the Green Swan Conference in Manila, Banca d'Italia Governor Fabio Panetta said climate change has stopped being a distant threat: it already shapes economic and financial conditions. Cutting emissions remains essential but cannot remove physical risk, and some damage is now unavoidable, so resilience must be built through three tasks: understanding risks, sharing them and reducing exposure. The costs are visible in weaker productivity, lost capital and strained budgets, with extreme weather causing over two hundred billion dollars of direct damage in 2025, more than double the early-2000s level, and shocks that can also move inflation, hitting emerging economies hardest. Governments lead climate policy; central banks and supervisors should simply keep meeting their existing mandates in a changing environment.
2. Understanding the risk
Data on physical climate risk remain patchy in availability, quality and comparability, while hazards are local, arrive in bursts and become harder to predict from history as extremes change. That makes them hard to measure and price, and better information also steers capital towards the places needing adaptation most. Financial institutions should fold climate into credit, market, operational and insurance risk instead of treating it as a separate compliance task. Artificial intelligence can sharpen modelling, forecasting and early warning, but it cannot replace reliable data, sound models and human judgement.
3. Sharing and absorbing the risk
Much of the loss from natural disasters is uninsured, so households cannot rebuild, firms stop producing or default, governments pay after the event and the shock reaches banks. Properly priced insurance does more than compensate: it rewards prevention. Yet cover is hard to expand, because people underestimate risk, premiums can be unaffordable and some markets are thin. The answer is a layered system: private insurers take smaller, frequent losses, reinsurers larger diversified ones, and public backstops handle extreme events while keeping prevention incentives, an approach developed under Italy's 2024 Group of Seven presidency and reaffirmed this year. Catastrophe bonds can widen the capital base, and Italy has introduced compulsory cover against floods, earthquakes and landslides for non-farm firms, with a public backstop. Premiums must stay affordable and reflect risk.
4. Reducing exposure through adaptation
Prevention matters most where exposure is high and fiscal room is thin, because rising debt limits adaptation spending and weak adaptation worsens public finances, a climate-debt spiral. Adapting is cheaper than rebuilding repeatedly, yet it is badly underfunded in emerging economies, held back by few investable projects, uncertain regulation and weak institutions. Governments should build resilient infrastructure, set planning standards and publish hazard information, while development banks use guarantees and blended finance to draw in private money. Technology helps with forecasting and monitoring, but growing data centres raise demand for energy, water and raw materials.
5. Conclusion
Understanding, sharing and reducing risk reinforce one another, and no institution can deliver them alone: governments, insurers, businesses, development banks and central banks each have a part, and international cooperation is essential because shocks cross borders. The aim is for economies to absorb climate shocks without them turning into wider crises; preparing for the future starts with building resilience now.