Climate change creates both risks and opportunities for the financial sector. Institutions are exposed to physical risks (increasing severity and frequency of weather-related events) through their portfolios, as well as transition risks (arising from the global effort to achieve a low carbon economy) both directly and indirect. To remain competitive and meet external stakeholder requirements, financial institutions must not only understand these risks and opportunities, but actively demonstrate management and embedding into decision-making.

At this PKE meeting an introductory overview to the topic of Climate Risk was discussed, including,

• What is climate risk and why is it material to the financial sector?
• Understanding climate risk: physical and transition risk channels
• Key considerations for FIs when beginning to embed climate risk

The recording of the speaker's presentation is available for viewing. Additional material is avialable on the RSBP platform for further research - RSBP publication on Climate change and financial risks and an online course on EBRD's Environmental and Social Policy (excerpts for financial institutions).