Global Regulators Probe Climate Risk Management in Banking

Global banking regulators have surveyed lenders on managing climate risks, aiming for consensus amid differing international views. The Basel Committee's unpublished survey featured around 60 questions covering risk and operations. There is ongoing debate over how climate change impacts financial stability without a universally accepted risk model.

Global banking regulators are intensifying their scrutiny of how lenders manage climate risks, as they seek to harmonize conflicting approaches around the world. This move was highlighted by a recent survey conducted by the Basel Committee on Banking Supervision, which drew responses during the summer from major banks.

The survey asked about 60 detailed questions, ranging from risk management to the banks' operational strategies across various departments. The aim was to collect insights into how financial institutions are handling the complexities of climate change, especially in light of a forthcoming proposal from the Basel Committee regarding climate risks.

Despite these efforts, considerable divergence remains on how to manage climate risks effectively. Different countries have adopted varied stances, and there is no single accepted methodology for modeling these risks. Insights from the survey could eventually shape best practice standards for banks internationally.

(With inputs from agencies.)