JFSA reports on storm and flood risk management practices
JFSA published a report on financial institutions' practices for managing storm and flood risks and supporting affected clients, following its 2022 climate supervisory guidance.
The report illustrates supervisory expectations on physical climate risk management, focusing on storm and flood exposures. Institutions should refine physical risk quantification, portfolio-level scenario analysis, and client support protocols in line with JFSA observations.
Physical climate risk is a growing supervisory focus; benchmarking against peer practices reduces regulatory and credit exposure.
Action Required
Benchmark climate physical risk management practices against JFSA-highlighted approaches and enhance client engagement frameworks for weather-related events.
Directly informs supervisory expectations on climate risk management, a strategic and systemic priority for Japanese banks and insurers.
Physical climate risk framework requires update against JFSA-published practices. Enhance flood/storm exposure mapping, client engagement documentation, and scenario analysis. Track supervisory dialogue outcomes.
“The FSA published a report which illustrates a range of practices among financial institutions in managing financial risks arising from storm and flood damage and providing support for their clients.”