Assessing the Materiality of Climate Risks

Climate risk management is at a crossroads. Recognized as systemic threats to financial stability, C&E risks require robust frameworks akin to those for market and credit risks. However, challenges such as data scarcity and modeling complexities persist. A true ERM approach, integrating various risk types—including climate—into a unified strategy, is crucial for substantial progress.

Key Considerations for CROs

• Understand the Material Impact
• Report Aggregated Data
• Integrate Climate Risks into Credit Processes
• Develop Climate Stress-Testing Scenarios
• Assess the Impact on Cash Flows and Liquidity Buffers

The Case for an ERM Approach
Adopting an ERM framework enables financial institutions to systematically identify, assess and mitigate climate-related risks, enhancing financial stability and contributing to a sustainable future.

Discover how to effectively manage climate risks with a comprehensive ERM approach.