Nature-related risk: the next challenge for banking risk management

As supervisory expectations evolve beyond climate risk, banks are facing a new challenge: how to translate nature-related risks into measurable financial impacts. Nature-related risks require highly granular geospatial data, value-chain visibility and new methodologies that can link ecosystem degradation and pressures on biodiversity to financial risk metrics.

This paper explores the operational, data and methodological hurdles institutions must address to integrate nature-related risks into risk management frameworks, Internal Capital Adequacy Assessment Processes (ICAAP) and forward-looking scenario analysis. It also explains why traditional approaches may no longer be sufficient and how banks are responding to this emerging supervisory and strategic challenge.

The paper makes intriguing reading for chief risk officers, heads of climate and environmental, social and governance risk, credit risk leaders, ICAAP and stress-testing specialists, risk modellers and prudential risk professionals at banks and financial institutions.

Download the paper to learn how banks are beginning to turn nature-related risks into decision-useful risk metrics – and prepare for the next phase of supervisory scrutiny.