Strategies for banks to adapt to climate change
Bain | Key Findings
- Wildfires, droughts, and other climate dangers jeopardize banks’ loan portfolios; however, many FIs have a limited understanding of their vulnerabilities.
- 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.
- Proactive measures taken by banks can improve financial stability, increase customer retention, and ensure compliance with emerging regulatory standards.
- Evaluating physical risk necessitates advanced tools, capabilities, forecasting horizons, and data—all of which remain difficult to acquire and integrate.