FIs that have successfully embedded climate risk management benefit from a high level of coherence between strategy, operations and culture.
- Climate risk tools, methodologies and principles become part of the organisation’s core risk management, credit and governance processes.
- Teams have increased confidence and capability in understanding and managing climate risks.
- Tools and processes drive a culture of continuous improvement and can be further adapted as organisational needs evolve.
- The organisation can show progress towards its strategic goals, while staying agile to market developments and climate shocks.
The following elements can help embed climate risk management within FIs.
- Culture and change management
- Foster a proactive risk culture where climate risk is part of everyday decision-making, rather than treated as a compliance exercise.
- Encourage open dialogue and continuous learning on climate risk, empowering staff to raises concerns where they see potential risks.
- Use change management strategies – such as internal champions, communication campaigns and visible leadership – to embed new ways of working.
- Business line engagement and buy-in
- Involve all relevant business units early in developing and refining climate risk-related processes to ensure they are practical and relevant.
- Create structured feedback loops between business lines and risk teams to improve criteria and address operational challenges.
- Strong leadership and visible senior sponsorship
- Secure active board and executive support for climate risk management, not only for approvals but also for advocacy and accountability.
- Engage key external stakeholders to reinforce climate risk management as a strategic priority and driver of long-term value and resilience.
- IT systems and infrastructure
- Integrating climate-related data across business lines into existing analytics dashboards to improve insights and response times.
- Automate monitoring and escalation to ensure real-time risk awareness and coordinated action.
- Ensure systems work seamlessly with existing risk and finance platforms to support clear reporting and auditing.