Monitoring climate risk: central to forward-looking oversight of the financial markets

FINMA continues to see climate risks as a longer-term risk for the Swiss financial-services industry. It is addressing the topic systematically and is currently analyzing those areas among the Swiss institutions subject to supervision that might be exposed to elevated climate-related risks. Based on an assessment of risks, FINMA addresses the relevant risks together with the largest banks and insurers. Together with the Swiss National Bank and academic institutions, FINMA also analyses the risks of the two big banks in a pilot capacity. Moreover, FINMA intends to raise awareness of these risks by introducing an expanded disclosure obligation. A more complete and more consistent disclosure of these financial risks will enhance market transparency, financial institutions’ risk awareness and legal certainty.

 

The institutions should already be taking account of such climate-related financial risks that are reflected in the known risk categories (credit, market, liquidity and operational risks, plus insurance risks where insurers are concerned) and, if significant, should also be disclosed. Making the requirements to disclose climate-related risks more concrete will on the one hand raise awareness of the need to record these risks while also, on the other hand, giving the supervised financial institutions a specific and legally secure framework for such disclosure. In this way, transparency will be improved for all market players. The supplementary disclosure specifications in the areas of governance, strategy, risk management and metrics fit into the existing framework formed by the related circulars on disclosure at banks and insurance companies; their content is geared to the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). The new disclosure obligations will apply to institutions in supervisory categories 1 and 2 (extremely important, complex institutions and very important, complex institutions).

FINMA Risk Monitor 2020

Updated: 11.11.2020 Size: 0,48  MB
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