01 Jul 2021

Near Horizon – Banks Prepare for Climate Risk Management

The Hong Kong Monetary Authority released the Climate Risk Management section of its Supervisory Policy Manual on 20 July. These new guidelines suggest that climate risk assessment will be a wide-ranging exercise. The HKMA also expects all Authorised Institutions (AIs) under its supervision (banks and money lenders) to prepare climate-related disclosures as soon as possible, and no later than mid-2023.

This edition looks at this new set of requirements and points out what sort of daunting tasks bank management faces in transforming climate risks into traditional risks that their operational staff can take on board. It also examines why climate risk management cannot be compartmentalized in one corner of a bank, but rather, it is a cross-cutting issue affecting all levels.