Federal Reserve Bank of New York Executive Vice President Kevin Stiroh described the complexity of climate change risk and the challenges facing climate change risk managers.

At the Global Association of Risk Professionals 2020 Climate Risk Symposium, Mr. Stiroh stated that understanding climate change risk is complex because of the many interconnections and feedback loops, the likelihood of non-linearities and tipping points, and "massive" uncertainty about the timing of climate impacts. Mr. Stiroh stated that the implementation of climate change risk management is a complicated problem because success depends on analyzing granular data across sectors, implementing new governance, and investing in new expertise in the workforce.

Mr. Stiroh warned that success in managing climate change risks cannot be satisfied by taking a "cautious approach."

As Co-Chair of the Basel Committee's Task Force on Climate-Related Financial Risk ("TFCR"), Mr. Stiroh reported that the TFCR first-phase work on existing regulatory and supervisory initiatives is complete and that the TFCR will now turn its focus to understanding climate risk transmission channels.

Primary Sources

  1. FRBNY Speech, Kevin Stiroh: A Microprudential Perspective on the Financial Risks of Climate Change

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Cadwalader, Wickersham & Taft LLP
Cadwalader, Wickersham & Taft LLP
POPULAR ARTICLES ON: Environment from United States
Biden-Harris's Bank Shot: Financial Institutions, Climate Change, And The Coming Regulatory Revolution (Part 1)
Arnold & Porter
This Advisory is the first in a series on ESG considerations for the financial services industry that Arnold & Porter will be publishing over the next several months.
More On The Social Cost Of Carbon — Are We Doing It All Wrong?
Foley Hoag LLP
Last month, I posted about the Biden administration's effort to develop a new estimate of the social cost of carbon. The EO requires a new interim SCC within 30 days
BlackRock Details Its Climate Expectations
Cooley LLP
In his 2021 letter to CEOs, BlackRock CEO Laurence Fink asked companies to disclose a "plan for how their business model will be compatible with a net zero economy"...
Eight Important Updates About Recent PFAS Regulatory Developments
Arnold & Porter
In the months since our 2020 update on federal actions affecting per- and polyfluoroalkyl substances (PFAS), the Environmental Protection Agency (EPA) has continued to take action on its PFAS Action Plan.
Is BlackRock Starting To Walk The Walk?
Foley Hoag LLP
So says BlackRock. And when you manage $8.7 trillion, people tend to listen to what you say.
Cost-Benefit Analysis Is Very Complicated — And Very Important
Foley Hoag LLP
It's only a slight rhetorical exaggeration to say that the limited bandwidth left to environmental issues other than climate change in recent years has been largely occupied by concerns about PFAS...