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The GARP Risk Institute (GRI) explored the challenges that financial institutions face when integrating climate risk into their risk management practices when it issued its second annual survey on climate-related financial risks earlier this year.
Now, expectations are rising. Regulators in Asia, such as Monetary Authority of Singapore (MAS), have begun to broaden the scope of these risks to include environmental risks.
What does this mean? For starters, firms are now having to account for areas such as pollution, loss of biodiversity, and changes in land use in their governance and quantitative frameworks.
These developments follow a report by Network for Greening the Financial System (NGFS), a network of central banks and supervisors, that marked the expansion of climate change to environmental risks by giving supervisors a guide to incorporating environmental risks into their prudential supervision.
To be sure, Asian regulators are approaching environmental risk in different ways. Regardless, these developments could have a profound impact on how organizations manage climate risk. This article by GRI’s Maxine Nelson explores some of these approaches and the implications for institutions.
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