While climate risk management at all financial institutions has significantly progressed in recent years, differences remain between leading firms and those that are less advanced. In this new report, GARP Risk Institute examines key trends from the previous four annual Global Climate Risk Surveys to offer a holistic view of the evolution of climate risk practices. 

Key Takeaways:

• Firms deemed climate risk leaders are more advanced across all six dimensions covered by the survey; however, the gap has narrowed over the past four years.
• The gap is smallest between top firms and others in foundational areas, namely governance, strategy, and risk management, and the widest in the more quantitative areas of metrics, targets, and limits; scenario analysis; and disclosures.
• Boards at leading firms are discussing climate risk more and have access to better information, with nearly 90% of leaders’ boards seeing climate-related papers at least four times a year.
• Leading firms assess climate-related risks and opportunities more comprehensively and over longer time periods.
• More than half of the leading firms expect to increase their climate-staffing levels significantly over the next two years, compared with a third of the others.

About the authors

Jo Paisley, President, GARP Risk Institute, has worked on a variety of risk areas at GARP Risk Institute, including stress testing, operational resilience, model risk management, and climate risk. Her career prior to joining GARP spanned public and private sectors, including working as the Director of the Supervisory Risk Specialist Division within the Prudential Regulation Authority and as Global Head of Stress Testing at HSBC.

Maxine Nelson, Senior Vice President, GARP Risk Institute, currently focusses on sustainability and climate risk management. Previous roles have included Global Head of Wholesale Risk Analytics and Head of Capital Planning at HSBC, responsibility for counterparty credit risk at the UK FSA, leading KMPG London’s credit risk team, senior consultant at Oliver Wyman, and operational risk modelling at NAB.