Featured Product

    BCBS Issues Principles for Management and Supervision of Climate Risks

    November 16, 2021

    The Basel Committee on Banking Supervision (BCBS) issued consultation on principles for the effective management and supervision of climate-related financial risks, following the publication of a series of analytical reports this year. Through this consultation, BCBS seeks to promote a principles-based approach to improve banks' risk management practices and supervisory practices related to climate-related financial risks. The Committee intends to monitor implementation across member jurisdictions to promote a common understanding of expectations, support the development of harmonized practices, and facilitate implementation of the principles as soon as possible. The commend period on the consultation closes on February 16, 2022.

    BCBS is taking a holistic approach to addressing climate-related financial risks to the global banking system and this includes the assessment and consideration of disclosure, supervisory, and regulatory measures. The 18 principles presented in the consultation seek to achieve a balance in providing a common baseline for internationally active banks and supervisors, while retaining sufficient flexibility given the evolving practices in this area. These principles span the following areas:

    • Corporate governance
    • Internal control framework
    • Capital and liquidity adequacy
    • Risk management process
    • Management monitoring and reporting
    • Comprehensive management of credit risk
    • Comprehensive management of market, liquidity, operational, and other risks
    • Scenario analysis
    • Prudential regulatory and supervisory requirements for banks
    • Responsibilities, powers, and functions of supervisors

    The principles take into account the concept of proportionality. Specifically, with regard to scenario analysis, including stress testing, the principles are formulated with a view toward application to large, internationally active banks and to supervisory and other relevant financial authorities in Basel Committee member jurisdictions. However, smaller banks and authorities in all jurisdictions can benefit from a structured consideration of the potential impact of climate-related financial risks. BCBS welcomes feedback from all stakeholders, specifically on whether the principles appropriately capture the necessary requirements for the effective management of climate risks and the related supervision and if there are any aspects that the Committee could consider further or that would benefit from additional guidance. The Committee also seeks views on how the transmission of environmental risks to risk profiles of banks should be taken into account when considering the potential application of these principles to broader environmental risks in the future and what key aspects should be considered for this. Any comments on the individual principles and supporting commentary are also welcomed.

     

    Related Links

    Comment Due Date: February 16, 2022

    Keywords: International, Banking, Climate Change Risk, ESG, Basel Framework, Credit Risk, Liquidity Risk, Reporting, Stress Testing, Scenario Analysis, Regulatory Capital, Operational Risk, Market Risk, BCBS

    Featured Experts
    Related Articles
    News

    APRA Penalizes Heritage Bank for Incorrect Reporting of Capital

    The Australian Prudential Regulation Authority (APRA) found that Heritage Bank Limited had incorrectly reported capital because of weaknesses in operational risk and compliance frameworks, although the bank did not breach minimum prudential capital ratios at any point and remains well-capitalized.

    November 29, 2021 WebPage Regulatory News
    News

    OSFI Releases Annual Report 2021-2022

    The Office of the Superintendent of Financial Institutions (OSFI) released the annual report for 2020-2021.

    November 29, 2021 WebPage Regulatory News
    News

    APRA Finalizes Guidance on Management of Climate Change Risks

    The Australian Prudential Regulation Authority (APRA) released the final Prudential Practice Guide on management of climate change financial risks (CPG 229) for banks, insurers, and superannuation trustees.

    November 26, 2021 WebPage Regulatory News
    News

    EBA Publishes Single Rulebook Q&A Updates in November 2021

    The European Banking Authority (EBA) Single Rulebook Question and Answer (Q&A) tool updates for this month include answers to 10 questions.

    November 26, 2021 WebPage Regulatory News
    News

    EC Proposes New Measures Under Capital Markets Union Package

    The European Commission (EC) has adopted a package of measures related to the Capital Markets Union.

    November 25, 2021 WebPage Regulatory News
    News

    European Council Adopts Position on Digital Finance Package Proposals

    The European Council adopted its position on two proposals that are part of the digital finance package adopted by the European Commission in September 2020, with one of the proposals involving the regulation on markets in crypto-assets (MiCA) and the other involving the Digital Operational Resilience Act (DORA).

    November 25, 2021 WebPage Regulatory News
    News

    PRA Proposes Rulebook Changes; BoE Extends BEEDS Testing Window

    The Prudential Regulation Authority (PRA) is proposing, via the consultation paper CP21/21, to apply group provisions in the Operational Resilience Part of the PRA Rulebook (relevant for the Capital Requirements Regulation or CRR firms) to holding companies.

    November 25, 2021 WebPage Regulatory News
    News

    FED Outlines Lending Conditions and Supervisory Activities in H1 2021

    The Board of Governors of the Federal Reserve System (FED) published a report that summarizes banking conditions in the United States, along with the supervisory and regulatory activities of FED.

    November 24, 2021 WebPage Regulatory News
    News

    EBA Publishes Standards to Calculate Risk-Weights of CIUs Under CRR

    The European Banking Authority (EBA) published the final report on draft regulatory technical standards for the calculation of risk-weighted exposure amounts of collective investment undertakings or CIUs, in line with the Capital Requirements Regulation (CRR).

    November 24, 2021 WebPage Regulatory News
    News

    APRA Expects Boards to Strengthen Ability to Oversee Cyber Resilience

    The Australian Prudential Regulation Authority (APRA) recently completed two pilot initiatives in its 2020-2024 Cyber Security Strategy, which was published in November 2020.

    November 23, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7736