Reserve Bank of New Zealand has released a draft guidance on how organizations should manage climate-related risks as part of a larger risk management framework.
The bank said in a statement that entities needed to look ahead to a range of plausible future climate scenarios, in developing actions and targets to ensure that their business model and strategy are resilient.
The central bank is recommending that organizations increase their capacity for scenario analysis and stress testing connected to climate change.
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Although certain characteristics of climate-related risks make it vital to give them specific analytical analysis, the central bank’s draft guidance advises that organizations manage climate-related risks within their larger framework for risk management.
Since the beginning of 2023, a number of major incidents have affected New Zealand; insurance firms have already received more than NZ$1 billion in claims, and the government is evaluating whether it may now be too hazardous to rebuild in some places.
The Deputy Governor of the bank, Christian Hawkesby said โWe recognise that climate-related risks will not affect all entities equally and the guidance stresses that appropriate measures are proportionate.โ
Story was adapted from Reuters
