CLIMATE RISK AND SUSTAIBABLE FINANCE
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Risk Management (Elective) — CAIIB.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
What is climate risk in the context of banking and financial institutions?
Climate risk refers to the financial risks that arise from climate change, including physical risks from extreme weather events and transition risks from the shift to a low-carbon economy.
What is physical risk in climate change and how does it impact bank assets?
Damage to assets from climate events, reducing collateral value.
What are the two primary categories of climate risk recognised by regulators?
The two primary categories are physical risk (acute and chronic impacts of climate change) and transition risk (risks from policy, technology, and market shifts toward a low-carbon economy).
What is a Green Loan and what principles govern it?
Loan financing green projects under Green Loan Principles (GLP).
What is acute physical risk in the context of climate risk for banks?
Acute physical risk refers to event-driven hazards such as floods, hurricanes, cyclones, and wildfires that can damage collateral assets and impair borrowers' ability to repay loans.
What does 'net zero' mean in the context of banking commitments?
Balancing greenhouse gas emissions with equivalent carbon removals.
What is chronic physical risk and how does it affect bank portfolios?
Chronic physical risk refers to longer-term shifts such as rising sea levels, changing rainfall patterns, and temperature increases that gradually erode asset values and economic productivity in affected regions.
What is climate-related market risk for banks?
Loss in portfolio value due to climate-driven asset price changes.
Video classes for this chapter
More chapters in Module D - Operational Risk and Integrated Risk Management
Master the full RM syllabus
Every chapter of Risk Management (Elective) — videos, tests, notes and one-liner decks in one place.