PRA and FCA hosted, on March 08, 2019, the first meeting of the Climate Financial Risk Forum (CFRF). The forum brings together senior representatives from across the financial sector, including banks, insurers, and asset managers, to develop practical tools and approaches to address the financial risks from climate change.
At its first meeting, the forum decided to set up four working groups to focus on risk management, scenario analysis, disclosure, and innovation. Each working group will be chaired by a member of the forum and will meet more frequently than the CFRF, reporting back at each CFRF meeting. The aim is to produce practical guidance on each of the four focus areas. The final outputs will be shared with industry more widely. Membership of the working groups will be wider than the forum to allow them to draw on expertise as necessary, such as from academia and industry. The forum is chaired by Sarah Breeden (Executive Director of International Banks Supervision, PRA) and Christopher Woolard (Executive Director of Strategy and Competition, FCA). The forum will meet three times a year and will report to Sam Woods (CEO of PRA and Deputy Governor at BoE) and Andrew Bailey (CEO of FCA).
Climate change and society’s response to it presents financial risks that are relevant to the objectives of PRA and FCA. While these risks may crystallize in full over longer time horizons, they are becoming apparent now. Firms are enhancing their approaches to managing these risks, but face barriers to implementing the forward-looking, strategic approach necessary to minimize the risks. The CFRF aims to reduce these barriers by developing practical tools and approaches to address climate-related financial risks. Membership of CFRF is representative of the UK financial sector, including firms of varying size, business model, and maturity of approach to climate-related risks. The CFRF members from the banking sector include BNP Paribas, HSBC, JP Morgan, and RBS.
Related Link: Press Release
Keywords: Europe, EU, UK, Climate Financial Risk Forum, Climate Change Risks, Climate Risks, PRA, FCA
Previous ArticleIMF Report Discusses Measures to Address Issue of NPEs in Greece
EC published, in the Official Journal of the European Union, a notification that the European Court of Auditors (ECA) has published a special report on resolution planning in the Single Resolution Mechanism.
BoE published a scenario against which it will be stress testing banks in 2021, in addition to setting out the key elements of the 2021 stress test, guidance on the 2021 stress test, and the variable paths for the 2021 stress test.
PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS).
FSB published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.
FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.
ECB published results of the quarterly lending survey conducted on 143 banks in the euro area.
Bundesbank published Version 5.0 of the derivation rules for completeness check at the form level, with respect to the data quality of the European harmonized reporting system.
ESAs published the final draft implementing technical standards on reporting of intra-group transactions and risk concentration of financial conglomerates subject to the supplementary supervision in EU.
EBA published the annual report on asset encumbrance of banks in EU.
FCA proposed two sets of guidance on the approaches to mortgage repossessions and consumer credit repossessions, with comment period ending on January 18, 2021.