Status: Draft -- Not PublishedWill be live at 06/22/2021 09:01
11th Annual EY-IIF Bank Risk Management Survey Finds Climate Change Now a Top Concern
For the first time since the survey’s inception over a decade ago, climate change tops the list of long-term risks for banks, according to the 11th Annual EY-IIF bank risk management survey, “Resilient banking: Capturing opportunities and managing risks over the long term.” The survey of 88 financial institutions across 33 countries provides a window into the changes in risk management seen globally during the past decade, and the major risks anticipated over the next 10 years.
More than nine in ten (91%) of surveyed bank chief risk officers (CROs) view climate change as the top emerging risk over the next five years. Only about half (52%) of CROs said the same in 2019. In the near-term, almost half (49%) of CROs now view climate change as a top risk requiring their urgent attention over the next 12 months. In 2019, only 17% took that view. Beyond climate change, the most important emerging risk according to CRO respondents is the length and depth of the global economic recovery (83%).
The survey finds that banks in practice are still maturing in their ability to assess physical and transitional risk exposures: just over half (54%) have a preliminary understanding of their climate change risk exposure and more than a quarter (28%) have a somewhat complete understanding. In the near-term, banks believe credit risk will be the No. 1 concern over the next 12 months – according to 98% of CROs – amid the global economic recovery from the COVID-19 pandemic. Cybersecurity is perceived to be the second most urgent risk (80%).