Responding to Climate Change Risk: A Financial Regulator’s Perspective

When it comes to setting out the financial system’s response to climate change and the related risks, it is clear that financial regulation will have a key role to play.

Over the past year, we’ve seen supervisors setting out their expectations for climate risk management, with a number undertaking stress testing or scenario analysis exercises. More authorities are implementing mandatory Climate-Related Financial Disclosures, and the NGFS continues to grow, with now over 80 members. The recognition of climate change as a source of systemic risk means that this flurry of activity is set to continue this year.

That’s why this episode will be focusing on what the appropriate role of financial services is in tackling climate change, as well as the best way to test firms’ resilience to these risks. We’ll also discuss how climate risks should be balanced alongside broader ESG risks and some of the key hurdles that will need to be overcome in the years ahead.

 

This episode covers:

• How financial regulators are responding to climate risk
• Stress testing and scenario analysis – how and when these tools should be deployed
• Some of the current limitations around data
• Looking beyond climate change to broader environmental issues

 

If you have any questions, thoughts or feedback regarding this podcast series, we would love to hear from you. Please email us at: climateriskpodcast@garp.com

 

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Arthur Yuen – Deputy Chief Executive at the HKMA

Arthur Yuen is in charge of the full range of banking policy, supervision, conduct, and enforcement issues at the HKMA. He joined the HKMA in 1996 as Head of Administration and has since taken up different responsibilities including research and liaison on China economic and market development issues before being appointed Head of Banking Supervision in 2000. He took up the position as Executive Director (Banking Development) in July 2004, Executive Director (Banking Supervision) in June 2005 and Executive Director (External) in July 2008. He was appointed to his present position on 1 January 2010.