Climate risk managers debate role of client transition plans

Banks hope for guidance on whether to include changes in client behaviour in long-term scenarios

Risk managers are grappling with how to incorporate client transition plans into their projections for potential losses due to climate change – or even whether to include them at all.

Benjamin Wong, head of portfolio analytics in the risk management group at Singapore’s DBS Bank, described as “high-level” the typical climate risk scenarios like those designed by regulators’ Network for Greening the Financial System (NGFS). Consequently, banks have room for a huge range of different assumptions