Third Party Risk Management

Climate Change Risk – Building Your Program

You’ve had internal conversations with various steak-holders, and an executive sponsor has been identified, it’s time to begin building a program.

Below are some foundational recommendations

Topic Comments
Tone From the Top Its likely that you will encounter competing demands and direction from various parts of the organization. To ensure success, the Climate Change risk program will need an active executive sponsor. The tone for the program needs to come from the top and receive continuous executive support. Including Climate Change in appropriate polices and procedures will further strengthen efforts across your institution.
Regulatory Guidance Regulators have not yet issued final guidance; early signs appear that guidance will be inter-agency.
What Reporting Standards Should I Use? Some current standards in use today:

·        Taskforce on Climate Related Disclosures

·        Global Reporting Initiative

·        Sustainability Accounting Standards Board

While a regulatory standard has yet to be identified, the above can be a place to start as your institution familiarizes itself with methods, data sets, taxonomy, etc.

Risk Framework Climate Change Risk is no different from other risk categories. The program will need to identify 1st, 2nd & 3rd lines of defense.
Data Collection – No Silos Allowed As the program is being designed, you will find that Climate Change Risk will cross multiple risk categories; Operations, 3rd Party, Financial, etc. Recognize this anomaly and build the program appropriately.
Data Interpretation Use your Climate Change Risk data to not only report on the past but how it might inform the future. Risk managers, Climate Change SME’s and relationship managers can all benefit from this data.
Don’t Wait for Formal Guidance Get started now, smaller institutions with a focused geographic footprint or industry concentration could be more vulnerable to Climate Change risk than previously understood. Don’t wait.

This is an opportunity to build strong, long-lasting relationships, and enhance your reputation.

Fortrex Technologies is here to help your institution get the Climate Change Risk program launched. Please contact us to get started today.

Useful Links | SEC Proposes Rules to Enhance and Standardize Climate-Related Disclosures for Investors

Fortrex Technologies is here to help your institution get the Climate Change Risk program launched.  Please contact us to get started today.

Please let us know if you have questions and how we can help you continue to have an effective and efficient third party risk management program. Fortrex is here to assist.