With 60 days to go until the PRA’s climate risk management plan deadline of 15 October, here is our view on what a good plan looks like and how to embed climate risk management into your business.
How to structure your plan:
The PRA expects the plan to address financial risks from climate change as well as approaches to governance, scenario analysis and disclosures.
Through our work developing these plans with our financial services clients, we have uncovered some key elements to include beyond the standard organisational change plan:
- High-level risk and opportunity mapping – beyond just the current risks, dig into what future risks may look like and what opportunities climate change may bring
- The firm’s vision on climate change – how you see the future and the capabilities you have/will need to develop to reach that vision
- Change governance – shift beyond a governance structure to demonstrate how climate change risk objectives will be embedded into Senior Manager functions. It is important to evaluate and educate your board and senior managers to ensure they are equipped with the skills to effectively manage climate risk
- Scenario planning – demonstrate a concrete understanding of the transition and physical risk scenario capability that you want to build and your approach to developing it, considering in-house and third-party options
Use your existing risk management structures
Developing the plan may seem daunting, but the important thing to remember is that implementation can and should use your existing risk management structures.
Baringa can help
Our deep experience in climate risk management and modelling has developed over 20 years’ work with our energy, government and financial services clients. We understand the issues underlying climate risk and can help you get ahead of them. We can help you write, QA and submit your PRA plan as well as provide advisory and delivery expertise through the execution phase. Contact us to learn more.
In our next update, we’ll take a deeper look at how you can raise awareness and engagement with your board, C-Suite and senior management.