Managing climate change risks: The role of governance and scenario analysis

Laurent Clerc

Journal of Risk Management in Financial Institutions, 2021, vol. 15, issue 1, 38-50

Abstract: Climate-change and environmental risks, as illustrated by extreme weather events and biodiversity losses, pose a fundamental threat to humanity. Calls for action have intensified and pressures on the financial sector have significantly increased. As a result, environmental, social and governance (ESG) disclosures and risk assessment have improved. In this context, this paper highlights the crucial role of governance and scenario analysis in enhancing the effectiveness of climate-change and environmental risk management. Concrete examples are given, drawing on some results of the unprecedented ACPR pilot climate exercise, to illustrate the importance of scenario analysis.

Keywords: ESG; climate change; risk management; governance; stress testing; scenario analysis (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:aza:rmfi00:y:2021:v:15:i:1:p:38-50

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