July 21, 2024

State issues guidance for banking and mortgage institutions on climate risk management

Governor Kathy Hochul announced today that the New York State Department of Financial Services (DFS) has adopted new guidance for state-regulated banking and mortgage institutions.

This initiative is aimed at helping these entities manage the financial and operational risks associated with climate change. Governor Hochul emphasized the importance of addressing climate-related financial risks in New York, which she described as the financial capital of the world, to ensure continued access to affordable financial services for New Yorkers.

The guidance is structured to assist institutions in integrating the assessment of climate-related risks into their existing risk management frameworks. It emphasizes key aspects of prudent risk management, including corporate governance, internal control frameworks, and data collection and analysis.

This approach is expected to help institutions identify, measure, monitor, and control their material climate-related risks. DFS Superintendent Adrienne A. Harris highlighted that the guidance is designed to protect New Yorkers from financial harm by enabling regulated institutions to anticipate and respond to new and emerging risks. Additionally, DFS has provided resources to support smaller organizations in adopting measures to address their climate-related risks. A webinar scheduled for January 11, 2024, at 11:30 a.m. EST, will offer an overview of the guidance, marking a significant step in integrating climate risk management into the financial sector.

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