Climate-related financial risk

Roles that need it

• Credit Risk Analyst
• Sustainable Finance Analyst
• Risk Advisory Consultant
• Actuarial Analyst
• ESG Research Analyst

Skills it belongs to

• ESG frameworks and rating criteria
• Scenario and sensitivity analysis
• Risk judgment and escalation instinct

Related concepts

• Climate transition planA climate transition plan sets how a company will align its business with limiting global warming to 1.5 degrees Celsius, with targets, actions, investment and governance. ESRS E1 requires disclosure of any such plan, and EU banking rules require banks to prepare plans for prudential purposes.
• Double materialityDouble materiality is the CSRD principle that a sustainability matter must be reported if it is material from either angle: the company's impacts on people and the environment (impact materiality) or the matter's effects on the company's finances (financial materiality).
• Stress test (supervisory)A supervisory stress test projects a bank's capital under a common adverse macroeconomic scenario over several years. The EBA coordinates the EU-wide exercise every two years, and the results inform Pillar 2 guidance. Banks also run internal stress tests for the ICAAP and ILAAP.

Sources

• Principles for the effective management and supervision of climate-related financial risks, BIS (external site) accessed 31 Oct 2026
• Directive 2013/36/EU (Capital Requirements Directive), EUR-Lex (external site) accessed 31 Oct 2026

Updated 31 Oct 2026.