In 2021, many businesses around the world were affected by climate change-related weather events: heavy rains in Western Europe, storms and tornadoes in the U.S., and floods in Asia that caused massive property damage and business disruptions and insured losses of over $100 billion.
According to the World Economic Forum's (WEF) Global Risk Report 2022, climate change risk has the potential to overwhelm the global economy and impact financial institutions.
Many banks and financial institutions have become more conservative in assessing credit risks and aim to integrate climate risks into their governance, strategy, and risk management frameworks.
Indeed, climate change presents three major risks to banks:
Here are some banks that have taken climate risk into consideration and wish to integrate it into their risk management strategy
"We are currently working with the World Bank on a two-year program that will allow us to map climate risks for the Moroccan banking sector (physical risks and transition risks). This will help the banks since they will have a sectoral vision of the risks borne by BAM, which will constitute an input so that they can apply this analysis to their own portfolios," explains the Director of Banking Supervision