Large financial institutions will no longer have to deal with principles for climate-related financial risk management under a decision issued Monday by the national bank regulator.
The Office of the Comptroller of the Currency (OCC) said the principles (adopted in 2023 by the federal banking regulators) were “overly burdensome and duplicative.” In a statement, Acting Comptroller Rodney Hood said the agency’s existing guidance for banks’ risk management framework “applies to all activities conducted by supervised institutions and includes potential exposures to severe weather events or natural disasters.”
The agency said it expects banks to have effective risk management processes commensurate with their size, complexity and risk of their activities.
The principles adopted in 2023 applied to banks with $100 billion or more in assets. When issued, the agencies said they were intended to “support efforts by the largest financial institutions to focus on key aspects of climate-related financial risk management.”
The principles, the agencies said then were intended to affect multiple areas of bank management. Those included governance; policies, procedures, and limits; strategic planning; risk management; data, risk measurement, and reporting; and scenario analysis.
“Additionally, the principles describe how climate-related financial risks can be addressed in the management of traditional risk areas, including credit, market, liquidity, operational, and legal risks,” the agencies said in 2023.
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