Financial regulatory guidelines for climate risk management and related analytical tools

This chapter summarises regulatory guidelines issued by central banks and financial regulators on climate risk management. These guidelines require financial institutions to evaluate how climate risk affects financial risk. There are several reasons for focusing on climate risk in financial institutions and their regulations. Firstly, financial institutions face increasing exposure to risks stemming from extreme climate events. Regulatory frameworks help identify, assess and manage climate‐related vulnerabilities, strengthening overall financial stability and resilience. Secondly, regulatory actions foster a degree of standardisation in climate risk management practice. Guidelines promote uniformity in methodologies, facilitating better comparisons and integration into existing risk management practices. Lastly, compliance with regulatory standards is essential for financial firms, including banks, securities firms and insurance companies, as they help mitigate systemic risks that could arise from extreme weather events or climate‐related disruptions. © 2025 Emerald Publishing Limited