Climate Risks in Banks – Recent Updates in the Field

Continuing the theme of climate risks in banks and financial institutions, there were some notable news items and developments last week.

1. Firstly, Mr. Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, made a keynote speech at the Financial Market Authority’s Supervisory Conference in Vienna on October 20^th:

Overcoming the tragedy of the horizon: requiring banks to translate 2050 targets into milestones (europa.eu).

2. The ECB recently conducted a benchmarking exercise, asking banks to self-assess their capabilities in relation to the recently published supervisory expectations. At MORS Software we have covered the supervisory expectations in recent news articles and webinars alike, find out more:

Webinar: ESG – Climate Risk management in banks

Article: Climate risk is forcing banks towards integrated risk management software | Part

Article: Managing Climate Risks in Banks – Mortgage Lending, Affordability, Insurability, and the Role of Covered Bonds in Europe

3. The ECB has not yet published the results, but some light on the upcoming results was shed in the keynote. Apparently 90% of banks deem their activities only partially, or not at all compliant with the ECB’s supervisory expectations. There seems to be significant gaps in terms of banks tools and methodologies to conduct the kind of forward-looking scenario analysis which is crucial to manage climate risk and fulfil supervisory expectations. On another note, the Climate Financial Risk Forum (CFRF), an industry forum jointly convened by the FCA and the PRA, held a webinar on October 21^st and published their latest guides on best practice, related to climate risk management – please see the link below:

Climate Financial Risk Forum | Bank of England

MORS Software is a pioneer in the field of scenario analysis for both stress testing and financial planning purposes. With our unique transaction level data based integration, MORS Software is able help its clients monitor and manage climate related risks transparently, as the impact on credit, liquidity and market risk can be measured accordingly.

Would you like to know more how we at MORS Software can help you on the road to manage climate risks accordingly and simultaneously fulfil supervisory expectations?