The Monetary Authority of Singapore (MAS) has launched a set of three consultation papers on its proposed Guidelines on Environmental Risk Management for banks, asset managers and insurers.
Environmental risk has been recognized as a key global risk in recent years. It not only gives rise to reputational concerns, but also bears a financial impact on financial institutions through physical and transition risk. Physical risk arises mainly from climate change while transition risk arises from various factors such as changes in public policies or shifts in consumer and investor preferences. All these will ultimately have an impact on the entire financial ecosystem.
As such, MAS aims to enhance financial institutions’ resilience to environmental risk as part of their risk management strategies. They have identified three areas of proposed changes.
- Governance – The proposed guidelines set out MAS’ expectations on Board and Senior Management to oversee the integration of environmental considerations into their strategies, business plans and products. Clear roles and responsibilities should be set and there should be a designated person in senior management to oversee environmental risk.
- Risk Management – There should be regular reviews of the effectiveness of the environmental risk management framework and policies implemented. This includes ongoing monitoring, scenario analysis and capacity building programs to incorporate emerging issues relating to environmental risk.
- Disclosure – Meaningful disclosure of the environmental risks surrounding the financial institutions and the potential impact it may cause should be made. FIs are encouraged to disclose the potential impact of material environment risk to customers, including quantitative metrics such as exposures to sectors with higher environmental risk.
MAS Seeks comments on the proposed guidelines to be adopted and invites comments from all FIs and other interested parties to submit their comments by 07 August 2020.
How can Argus Help
We, at Argus Global, are a team of consultants who specialize in Regulatory Compliance for Financial Institutions in Singapore that are regulated by MAS. Argus shall be happy to collect your response and submit it on your behalf to the MAS before the deadline. We will be happy to answer your queries, whether specifically to this article or any other regulatory compliance hurdles you may face. Going forward Argus can help amend your policies to include environmental risk guidelines. Do reach out to us at firstname.lastname@example.org.
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