Table 4 Climate risk management index

Credit risk

Climate-related financial risks should be considered by management, including credit risk concentrations resulting from physical and transition risks might be part of effective credit risk management techniques. Management should evaluate potential changes in correlations across exposures or asset classes as part of the concentration risk assessment. Management should define credit risk tolerances and lending restrictions connected to these risks in accordance with the company's tolerance for risk

Liquidity risk

Management should analyze if climate-related financial risks might influence its liquidity position and, if so, include such risks into their liquidity risk management methods and liquidity buffers in accordance with sound oversight and liquidity risk management

Other financial risk

Management should keep a focus on interest rate risk and other model inputs for signs of increased volatility or less predictability as a result of climate-related financial concerns. Management should add commensurate levels of conservatism to their risk measurements and controls when applicable. Management should pay attention to how climate-related financial risks influence the company's exposure to pricing risk

Operational risk

Management should think about how financial risk exposures related to climate change might negatively affect the operations, regulatory environment, and operational resilience of the company

Legal/compliance risk

The management of the company should take into account how the legal and regulatory environment in which it operates is affected by financial risks related to climate change and risk mitigation measures

Other non-financial risk

The board and management should monitor how the operating environment and the implementation of strategic decisions impact the company's operational resilience and financial condition in accordance with sound oversight, as discussed in the strategic planning section