Climate change casts a cloud on bank asset quality and financial strength

Alberto Postigo and Alka Anbarasu discuss the threat of climate change to banks’ asset quality. Plus, Megan Fox and Steve Tu talk about the effects on banks and asset managers of the Biden administration’s new executive order on climate-related financial risk, and Sid Ghosh tells us whether businesses around the world can get insurance coverage for disrupted operations during the pandemic.Inside this episode:Megan Fox and Steve Tu talk about the effects on banks and asset managers of the Biden administration’s new executive order on climate-related financial risk, and Sid Ghosh tells us whether businesses around the world can get insurance coverage for disrupted operations during the pandemic. (begins at 2:37)Alberto Postigo and Alka Anbarasu discuss the threat of climate change to banks’ asset quality. (begins at 8:06)Related content:Insurance – Global: As coronavirus claims slow, risk to profitability recedes - Global coronavirus (re)insured losses will be contained within earnings as losses slow in 2021.Property & Casualty – US: Coronavirus litigation favors US insurers; legislative changes have mixed implications - US courts have largely sided with (re)insurers in litigation related to business interruption insurance, though a large number of cases are still pending.Banks – US: Biden order aims for coordinated assessment and mitigation of banks' climate-related financial risks, a credit positive - The oversight is credit positive for banks because it will contain their financial risk from climate-related and environmental risks.Asset Management – US: Biden executive order on climate-related financial risk benefits ESG focused asset managers  - The executive order clears the way to remove restrictions the prior administration had placed on investing in ESG, which has been a key growth area for asset managers.Banking – Global: Climate change to force further business model transformation for ban - Climate change creates operational and strategic challenges for banks globally as governments transition towards low-carbon economic models, and as physical climate risks become more acute.Banks – Asia-Pacific: Climate risks are growing, with large, diversified banks better positioned to cope - Large, diversified banks are inherently less susceptible to climate risks from a single location or industry. Also, they have been proactive in devising strategies to deal with such risks.