Category: Data & Disclosure
Global prudential standards may be revised on the back of regulatory body’s findings Global prudential standards may be revised on the back of regulatory body’s findings Global prudential standards may be revised on the back of regulatory body’s findings
Apr 15th, 2021
The Bank of International Settlements (BIS) has launched its findings on climate risk and banking, ahead of a potential revision of global rules governing the prudential regulation of banks.
BIS’s influential Basel Committee on Banking Supervision (BCBS), which represents central banks and supervisors from 28 jurisdictions, presented tandem reports concluding that banks may face reputational damage and litigation as a result of lending that negatively impacts on the climate, but such risks are not yet widely understood by regulators.
Analysis of climate-related financial risks currently focuses on how contractions in the economy will impact credit risks - or the ability of borrowers to repay debt - but does not sufficiently address other dimensions of risk which include liquidity, operational and reputational risks, the report found. This is partly due to the inherent complexity of estimating the nature of future climate hazards and cha…