CONTACT: Brigid Richelieu
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Trade Group Affirms Banking Industry’s Commitment to Managing Exposure to Climate-Related Financial Risks, Urges Principles- and Risk-Based Approach
Washington, D.C. – Regulators should use a principles- and risk-based approach to support banks’ efforts to manage and mitigate climate-related financial risks, the Financial Services Forum said Friday.
Responding to a proposal from the Federal Deposit Insurance Corporation (FDIC), the Forum welcomed the agency’s efforts to provide guidance for banks to address climate-related financial risk and provided specific recommendations on how the proposal could be adjusted to further reflect its stated goals.
“Our members recognize the need for banks to have robust capabilities for the safe and sound management of exposures to climate-related financial risks and have taken important steps to incorporate such risks into their comprehensive, enterprise risk-management frameworks,” Forum President and CEO Kevin Fromer said. “The proposal is helpful for understanding the FDIC’s particular areas of focus with respect to the management of climate-related financial risks, and we welcome FDIC guidance in this area as our member institutions continue to work to strengthen and refine their climate-related financial risk-management processes over time.”
The Forum’s letter offered several key observations and recommendations regarding the proposal and provided responses to specific questions posed by the FDIC. The Forum encouraged regulators to use high-level, risk-based principles that enable banks to have flexibility to incorporate climate-related financial risks into their existing risk-management frameworks and processes where appropriate. Additionally, the Forum promoted the use of scenario analysis, which can provide insights into a range of tailored scenarios.
The Forum’s full comments to the FDIC can be found here.
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The Financial Services Forum is an economic policy and advocacy organization whose members are the chief executive officers of the eight largest and most diversified financial institutions headquartered in the United States. Forum member institutions are a leading source of lending and investment in the United States and serve millions of consumers, businesses, investors, and communities throughout the country. The Forum promotes policies that support savings and investment, financial inclusion, deep and liquid capital markets, a competitive global marketplace, and a sound financial system.
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