💬 Climate Risk - “How exactly does climate change affect banks?”
In my previous post, I spoke about how climate change isn’t just an environmental concern—it’s a financial risk already affecting lending portfolios in Malaysia.
👉 Let’s take that a step further.
Bank Negara Malaysia’s CCPT outlines three categories of Climate Risk that every banker—especially those in credit, risk, and operations—should understand:
Climate risk isn’t just an environmental issue. It’s a financial, operational, and legal risk that’s already materialising. 🔹 In Penang, flash floods disrupted manufacturing SMEs, delaying deliveries and triggering loan restructuring. 🔹 A Sarawak-based plantation client faced rising insurance premiums due to wildfire exposure. 🔹 An automotive supplier in Selangor saw declining overseas demand as buyers shifted to lower-carbon supply chains.
These are not future possibilities. They are today’s realities—and they affect creditworthiness, loan performance, portfolio risk and business continuity.
In this short explainer, I’ve summarised the 3 types of climate risk: 1️⃣ Physical Risk – from floods, droughts, and heatwaves 2️⃣ Transition Risk – from policy, market, and technology shifts in the low-carbon economy 3️⃣ Liability Risk – from legal actions tied to climate inaction or poor due diligence
Whether you're a Relationship Manager, Credit Officer, or Risk Manager, climate risk is now part of your everyday responsibilities.
📊 Swipe through the slides to see how these risks translate into real-world impacts—and why they matter to us as bankers. Sourced from BNM CCPT Guidance
💬 I welcome your thoughts
