KUALA LUMPUR, Aug 25 (NNN-Bernama) — Climate change has climbed to the top of Asia-Pacific banks’ short- and long-term risk agendas, according to the 11th EY and Institute of International Finance (IIF) bank risk management survey.
Nine in 10 Asia-Pacific bank chief risk officers (CROs) surveyed view climate change as a top long-term emerging risk over the next five years — up from 59 per cent in 2019.
Asia-Pacific bank CROs are even more focused on climate change in the near term with 100 per cent viewing it as a top risk, requiring their urgent attention over the next 12 months, said EY Asia-Pacific financial services risk management leader David Scott.
This compares to only 49 per cent of CROs globally who view it as a top short-term priority.
“The greater immediacy that Asia-Pacific banks’ CROs are placing on climate change risk over the next year, compared to the global average, reflects the urgency that regulators across the Asia-Pacific region have placed on climate risk management capabilities, as well as a heightened focus by investors and shareholders on disclosures,” Scott said in a statement Wednesday.
The survey also found that Asia-Pacific banks in practice are still maturing in their ability to assess physical and transitional risk exposures and that sourcing and managing climate risk-related data remains a challenge.
While 80 per cent of surveyed Asia-Pacific banks’ CROs report having a preliminary understanding of their climate change risk exposure, just 20 per cent say they have a somewhat complete understanding.
Five of the top 10 emerging risks according to Asia-Pacific banks’ CROs relate to technology and data, including industry disruption due to new technologies (70 per cent), the pace and breadth of change from digitisation (60 per cent), and model risk related to machine learning or artificial intelligence (50 per cent).
— NNN-BERNAMA