By Robin Hamaker-Taylor
There are now just six weeks remaining until UK banks and insurers need to officially respond to the expectations of the Bank of England’s Prudential Regulation Authority (PRA).
On 15 April this year, the PRA issued a policy statement (PS11/19) on enhancing banks’ and insurers’ approaches to managing the financial risks from climate change. PS11/19 included the final version of supervisory statement (SS3/19) on managing the financial risks from climate change.
As set out in PS11/19, firms should have an initial plan in place to address the PRA expectations and submit an updated Senior Management Function (SMF) form by 15 October, 2019. It is understood that the PRA is expecting senior managers to be up to speed with the PRA’s expectations by this date – in just under five months’ time – rather than just getting into grips with the supervisory statement.
In its supervisory statement, the PRA stresses the importance of a comprehensive approach to climate risk management. Apart from the risk management process itself, firms are expected to consider elements relating to governance, scenario analysis and disclosures. Our ongoing work with banks and financial institutions indicates those firms who establish effective governance of climate risk management represent emerging best practice in this field. The PRA’s expectations are summarised in our earlier piece, available here.
Acclimatise and Vivid Economics have developed a guidance document which offers an overview of PRA expectations as set out in SS3/19. The guidance reviews our integrated suite of advisory services and analytical toolkits which support banks in meeting the expectations of the PRA’s supervisory statement. Our approach draws on our extensive track records in physical and transition climate risk assessment and management in the real economy.
To find out more about how we can help your firm meet the PRA’s expectations on managing climate-related financial risks, and to obtain a copy of our new guidance document, please contact Robin Hamaker-Taylor: R.Hamaker-Taylor(at) acclimatise.uk.com.