A study predicts if the government fails to address risks from climate change, losses incurred by financial institutions, such as banks and insurance companies, could grow significantly. 

In a report from a climate change stress test on Tuesday, the Bank of Korea(BOK) presented four scenarios based on different timings and the intensity of government climate response policies.

Citing the stress test, the report said that if the government achieves carbon neutrality or reduces carbon emissions by 50 percent of current levels by 2050, projected losses by 2100 would reach 27 trillion won, or around 19 billion U.S. dollars. 

However, if the government delays its response until 2030, the projected losses are expected to rise to around 40 trillion won, and further to 45-point-seven trillion won if no policy is implemented. 

The BOK stated climate risks are highly likely to become major threats in the future, undermining the soundness and financial stability of banks and insurance companies. 

The central bank called for improvements in risk management guidelines and increased investment into green-related industries.