Issue 4. 2022 27 (801) 683-0748 info@bmabankingsystems.com END-TO-END CORE CONVERSION BMA provides customized Core Conversion solutions to fit your bank's needs. Our new core operating system will transform your ability to be more competitive with current technology. The consistency presented by our core will offer you customized products, enhancements, and services to meet the unique needs of your clients. "Best of Class" Customer Service and Custom Pricing Safe and Secure Cloud based Solutions Extensive Fintech API Integration Solutions Consistent Expanding Solutions such as, IT as a Service, Teller Capture, and Auto Account Opening BMA ’ s managing climate-related risks. The information released by the OCC includes a set of general principles as well as specific areas of risk management. The general principles touch on governance – policies, procedures, and limits; strategic planning; risk management; data, risk measurement, and reporting; and scenario analysis. These principles provide guidance for developing an effective framework essential to the bank’s safe and sound operations. The principles outline expectations for board and senior management oversight, guidance for developing a written program, and the areas of consideration for planning, which should consider the bank’s overall business strategy, risk appetite, and financial, capital, and operational plans. It is also important that management is involved in overseeing the development and implementation process for identifying, measuring, monitoring, and controlling climate-related financial risk exposure within the bank’s management framework. Sound climate risk management is dependent upon the availability of relevant, accurate, and timely data; therefore, management should incorporate climate-related financial risk information into the bank’s internal reporting, monitoring, and escalation processes to facilitate timely and sound decisionmaking across the bank. The development of climate-related scenario analysis is an important approach for identifying, measuring, and managing climate-related risks. To ensure this framework is effective and successful, financial institutions should consider a risk assessment process as part of their sound risk governance framework. This will ensure that the board and senior management can identify emerging risks to develop and implement the appropriate strategies to mitigate and manage the risks. The guidance issued by the OCC suggests that financial institutions should consider incorporating climate-related financial risks when identifying and mitigating all types of risk. While the agencies will eventually elaborate on risk assessment principles, it is suggested that financial institutions consider credit risk, liquidity risk, other financial risk, operational risk, legal/compliance risk, and other nonfinancial risk. Conclusion While there is no specific set of guidelines for financial institutions to follow for climate risk, compliance, and management, this is an area that all banks should begin considering from a safe and sound banking standpoint. Future guidance will likely apply or be required of larger financial institutions; however, the guidance and risk considerations should be contemplated by institutions of all sizes. Risks can impact even smaller institutions, so taking a proactive approach rather than making a reactive response is the best plan of action. It is important that financial institutions stay abreast of the hot-button area of climate change and climate risk from a compliance and risk management perspective, as the society in which we are living continues to set a higher standard for an environmentally friendly world. n Julia A. Gutierrez serves as the Director of Education for Compliance Alliance, developing curriculum and presentations, as well as presenting at various schools and seminars, both live and in a Livestream/hybrid format. Julia brings over 20 years of financial industry experience to the Compliance Alliance team. The development of climaterelated scenario analysis is an important approach for identifying, measuring, and managing climate-related risks.
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