Climate Risk – The BIS Requirements for Banks
Climate risk has clearly moved into the mainsteam of concerns and needs to be addressed by all organisations. Banks are no different in this respect and the consequences of climate risk could have a profound impact on the future success of an organisation. The Bank for International Settlements (BIS) has issued draft standards for Banks to consider. Whilst these are not yet agreed, the direction set out in this paper is likely to drive activity in this area for years to come.
Banks need to respond to these challenges or are likely to face significant impacts not only from regulators but from competitors, customers and counterparties. This timely course takes delegates through these new requirements and considers their impacts on an organisation.
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- What is climate risk
- What really matters to a bank
- Relationship to ESG
- Climate-related risk drivers
- Transmission channels
- Climate-related financial risks
- Measurement and management
- Timetable
- The high level principles
- Relationship to existing corporate governance guidance
- Impact of climate risk on: The economy, the Business Environment, Competition
- Identifying physical risk drivers
- Identifying transition risk drivers
- Building this into decision making
- Module 1: Policies and procedures
- Module 2: Client onboarding
- Module 3: Transaction assessment
- Third party risk management
- Internal controls
- The 3 lines model
- Impact on capital planning
- Stress testing and scenario modeling for climate risk
- Relevant time horizons
- Impact on the ICAAP
- Impact on the ILAAP
- Identifying climate-related risks
- Managing and measuring climate-related risks
- Risk appetite modeling
- The risk appetite framework
- Developing key risk indicators
- Monitoring and escalation
- Threat scanning
- Risk data aggregation and climate risk
- Climate risk concentrations
- Risk reporting
- Developing proxies
- Clients and counterparties
- Quantitative and qualitative metrics
- Policies and procedures
- Climate-related risk drivers
- Impact on due diligence
- Monitoring risk profiles
- Metrics and heatmaps
- Impact on credit underwriting
- Risk mitigation
- Limits and concentrations
- Impact of climate on financial assets
- Consequences for volatility
- Impacts on liquidity buffers
- Impact on business continuity
- Relationship to operational resilience
- Impact on reputational risk
- Identifying climate-related pathways
- Impact on business model
- Measuring vulnerabilities
- Data and methodology limitations
- Benefits and limitations
- Time horizons
- The key components
- Appreciating the impact of the project
- Aligning the project to goals and missions
- Impact on pricing
- Risk-based implications