Risk Management
The objective of climate-related financial disclosures on risk management is to help users of financial reports understand how an organisation identifies, assesses, prioritises, and monitors climate-related risks and opportunities. This includes whether and how these processes are integrated into and inform the organisation’s overall risk management.
To meet this objective, an organisation should disclose information about:
the processes and related policies it uses to identify, assess, prioritise and monitor climate-related risks, including details about:
- the inputs and parameters it uses, such as data sources and the scope of operations covered;
- whether and how it uses climate-related scenario analysis to help identify risks;
- how it assesses the nature, likelihood and size of those risks, including whether it considers qualitative factors, quantitative thresholds or other criteria;
- whether and how it prioritises climate-related risks compared to other risks;
- how it monitors climate-related risks; and
- whether and how it has changed these processes since the last reporting period;
the processes it uses to identify, assess, prioritise and monitor climate-related opportunities, including whether and how it uses climate-related scenario analysis to help identify opportunities; and
the extent to which, and how, the processes for identifying, assessing, prioritising and monitoring climate-related risks and opportunities are integrated into and inform its overall risk management process.
When preparing disclosures to meet the requirements above, an organisation should avoid unnecessary repetition. For example, while the organisation must provide the information required above, if oversight of sustainability-related risks and opportunities is handled in an integrated way, it should avoid duplication by giving integrated risk management disclosures rather than separate ones for each sustainability-related risk and opportunity.