But, in seven out of the last 10 years, the figure has exceeded the annual average.
Ong warns that the rise of climate change, such as rising sea levels, can cause damage to assets and properties. This can result in large insurance claims and lower the collateral value of bank loans, he says.
The transition risks, as a result of policy changes and technological advancements, can also result in a significant amount of “stranded” assets.
“So you can [see] the trend of [natural disaster costs] going up,” Ong says in his keynote speech at the Singapore FinTech Festival on Monday.
As such, Singapore needs to fortify its financial systems to be resilient against climate change risks, says Ong.
Among the initiatives, Singapore is pushing for the enhancement of regulatory supervision on environmental risks management and solutions.
This comes as banks, insurers and asset managers will need to assess the impact of climate change on their balance sheet, loans and investment portfolios.
“This is about risk assessments and forward stress tests,” says Ong.
Singapore is also pushing for financial institutions to mitigate transition risks.
Ong says financial institutions should make “early strategic shifts” in capital allocations — away from carbon intensive assets — or risked being “stuck” with environmentally-unfriendly assets.
Besides that, MAS will publish a consultation paper on sustainability guidelines early next year.
This is to enhance sustainability-related disclosures, which in turn, will reinforce existing industry efforts.
“These guidelines will set standards on corporate governance, risk management and disclosures,” Ong says.
Moreover, Singapore will introduce more incentives for green lending, such as green bonds and loans.
