Integrating results of risk analysis into risk management processes

Why? In addition to assessing climate-related risks, financial institutions must also determine how to best integrate both qualitative and quantitative results into existing financial and non-financial risk management processes. This is a necessary step to ensure that assessments inform both strategic and operational decisions on the financial risk exposure related to climate change.

How? The Task-force on Climate-related Financial Disclosures provided guidance to help institutions include climate considerations in risk management processes. Often building on these principles, financial institutions are developing varying approaches to integrate these risks into broader risk management practice. To date, financial institutions looking at this issue have principally conducted pilot climate risk assessments and analyzed outcomes to identify their level of exposure and the assets and activities that are most at risk. They developed risk management processes on that basis.