Facing the increasing impacts around climate risk, financial institutions must develop a thorough understanding of the risks involved and how best to assess and measure those risks so that they can be incorporated in strategic planning exercises, risk appetite statements, portfolio management, and credit decision processes. Lack of experience and scarcity of historical data make this a daunting task. However, increasing climate risk awareness may also help financial institutions further create value for clients.
The IACPM, in conjunction with Oliver Wyman, conducted a benchmarking study to explore strategic and business implications of climate change, including the current state of integrating climate change considerations into credit risk and opportunity assessments and TCFD implementation. More than 40 IACPM member firms globally participated in the study.