Strategies for banks to adapt to climate change

Strategies for banks to adapt to climate change

Strategies for banks to adapt to climate change Bain | Key Findings

1. Wildfires, droughts, and other climate dangers jeopardize banks’ loan portfolios; however, many FIs have a limited understanding of their vulnerabilities.
2. The exposure of real estate assets to physical risks is expected to grow over the next few decades, likely diminishing collateral value and impacting the profitability of banks’ mortgage operations.
3. Proactive measures taken by banks can improve financial stability, increase customer retention, and ensure compliance with emerging regulatory standards.
4. Evaluating physical risk necessitates advanced tools, capabilities, forecasting horizons, and data—all of which remain difficult to acquire and integrate.

Source: https://www.bain.com/insights/fires-floods-and-loans-how-banks-can-deal-with-increasing-climate-risks-ceo-sustainability-guide-2023/