Establishing a climate risk enterprise strategy and a framework that is cognizant of geography climate change requirements, along with a robust operating model and measurable key performance indicators

Establishing climate risk policies and procedures and communicating the climate change agenda across all levels in the organization

Increased participation in green financing by focusing on a greener product portfolio such as green bonds and better priced loans to climate friendly counterparties.

Establishing a RegTech adoption framework for climate risk management, including assessment and identification criteria’s for identifying climate risk areas that can be solutioned using RegTech

Leverage existing RegTech solutions that can be extended to manage climate risk. For example, existing regulatory reporting solutions can be extended to manage climate risk-related regulatory reports.

A robust reporting mechanism that provides insightful climate disclosures per requirements of internal and external stakeholders

Lack of holistic enterprise level view of the climate risk and its touch points on varied existing risk types

Data availability. Data constitutes a key ingredient in climate risk management. While for traditional risk the historical data reflects the areas where organizations are more exposed, in the case of climate change there are multiple uncertain risk events that have a bearing on it.

Data taxonomy. Currently, there are limited defined data standards and taxonomies for gathering data for climate risk management.

Climate risk modeling capability. Expanding newer scenario variables related to climate risk for which projection has not been provided requires climate risk modeling capabilities.

Individual counterparty analysis. This requires assessing current vulnerability of a counterparty given the impact of scenario variables and a counterparty mitigation and adaptation plan, which is not part of credit risk assessment today.

Disclosure management. Banks and financial institutions are already reeling under huge regulatory disclosure requirements, and additional climate-related disclosures are going to add on to the existing workload.

Leverage RegTech solutions for measuring and assessing the impact of climate risk regulations and policies on existing business processes, data requirements and disclosure management.

Leverage machine learning-based RegTech to create hypothetical data sets that can be used as inputs in stress test models and to better assess the risk arising from extreme events.

Leverage statistical tools, for generating climate-specific scenarios, conducting simulation and analysis, simulation for better stress testing to enhance risk management and a governance framework.

Leverage RegTech data solutions for monitoring of climate risk and environmental data.

Leverage artificial intelligence for deriving predictive insights from the climate reports generated for active decision-making.

Expanding existing regulatory reporting by RegTech to standardize and incorporate climate related disclosures.