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March 2023 (published: 10.02.2023)
Number 1(52)
Home > Issue > Climate-related financial risk management in russian banks:
methodological aspects
Ivanov V.V. , Nurmuhametov R.K.
Climate change really creates financial risks. That’s why they should be included into the overall risk management process in banks. At the same time the definition of climate-dependent financial risk management principles is extremely important. The subject of the study is based on the Basel Principles financial risks associated with climate change bank’s management. The issue is aimed to determine how the Basel Principles can be implemented in the practice of Russian banks management. The object of the study are bank’s risks. The methods used in the study are universal and specific scientific methods, methods of comparative analysis. The authors consider the content of the principles developed by the Basel Committee on Banking Supervision, as well as the problems of their implementation in the risk management systems concerning the scale, complexity and risk profile of each bank. Special attention is devoted to realization of principles developed by the Basel Committee on Banking Supervision, interrelation between climate-related risks and capital and liquidity adequacy, scenario analysis as a tool of climate-related financial risks management, as well as to monitoring and quantifying material climate-related risks. The principles provide the need to estimate climate-related material financially risks throughout the entire life cycle of the loan – from customer registration until continuous monitoring of customer’s credit risk profiles related to climate. In these circumstances, banks are encouraged to conduct regular assessments of the concentration of climate-related financial risks in highly risk-prone sectors and geographical regions. The results of the study can be implemented in financial risk management systems in Russian banks.
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Keywords: climate risks, physical financial risks, transition risks, principles of financial risk management related to climate change, scenario analysis.
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
UDC 336.713
Climate-related financial risk management in russian banks:
methodological aspects
Climate change really creates financial risks. That’s why they should be included into the overall risk management process in banks. At the same time the definition of climate-dependent financial risk management principles is extremely important. The subject of the study is based on the Basel Principles financial risks associated with climate change bank’s management. The issue is aimed to determine how the Basel Principles can be implemented in the practice of Russian banks management. The object of the study are bank’s risks. The methods used in the study are universal and specific scientific methods, methods of comparative analysis. The authors consider the content of the principles developed by the Basel Committee on Banking Supervision, as well as the problems of their implementation in the risk management systems concerning the scale, complexity and risk profile of each bank. Special attention is devoted to realization of principles developed by the Basel Committee on Banking Supervision, interrelation between climate-related risks and capital and liquidity adequacy, scenario analysis as a tool of climate-related financial risks management, as well as to monitoring and quantifying material climate-related risks. The principles provide the need to estimate climate-related material financially risks throughout the entire life cycle of the loan – from customer registration until continuous monitoring of customer’s credit risk profiles related to climate. In these circumstances, banks are encouraged to conduct regular assessments of the concentration of climate-related financial risks in highly risk-prone sectors and geographical regions. The results of the study can be implemented in financial risk management systems in Russian banks.
Read the full article
Keywords: climate risks, physical financial risks, transition risks, principles of financial risk management related to climate change, scenario analysis.
DOI 10.17586/2310-1172-2023-16-1-43-53