Climate risk assessment and management Physical and transition risk assessment of loan portfolios for small and mid-sized banks.
We delivered for:
Climate risk assessment of Pacific bank lending, including a central bank, under the Asian Development Bank (ADB) SAFER Pacific programme.
SAFER Pacific: climate risk in Pacific bank lending
ClientAsian Development Bank (ADB), through DT Global
ProgrammeSupporting Sustainable and Adaptive Financing for Entrepreneurial Resilience in the Pacific (SAFER Pacific)
CountriesCook Islands, Fiji, Samoa, Solomon Islands and Vanuatu
Year2025 to present
Our roleLead climate advisor
The need
Pacific banks and financial institutions lend to businesses exposed to cyclones, floods, drought and sea level rise, but few measure that exposure in their loan books or manage it in their credit processes.
What we did
We carried out a quantitative climate risk assessment of a partner bank’s loan portfolio and identified the highest-risk loans. For the Development Bank of Solomon Islands we assessed loan portfolio, operational and transition risk, and rated 58 provisions in its strategy and policy documents against the four pillars of the Task Force on Climate-related Financial Disclosures (TCFD), from no evidence to fully operational.
Results
Four financial institutions supported, including a central bank, and USD 122.5 million of loans identified as exposed to climate risk.
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Questions about climate risk assessment and management
What is climate risk assessment for banks?
Climate risk assessment for banks measures how physical risks and transition risks could affect a bank’s loan portfolio, collateral and borrowers. LirioAI carries out climate risk assessments sized for small and mid-sized banks and financial institutions rather than global lenders.
What is transition risk?
Transition risk is the financial risk that comes from the move to a low-carbon economy, through changes in policy, technology, markets and reputation. For a bank, transition risk shows up in borrowers whose business models depend on high emissions.
What is physical risk?
Physical risk is the financial risk from climate hazards, both sudden events such as floods and cyclones and slow changes such as rising heat and sea levels, that damage borrowers’ assets and income.
What is a climate risk framework for banks?
A climate risk framework sets out how a bank identifies, measures, manages and reports climate risk across governance, strategy, risk management and disclosure. LirioAI helps banks build a climate risk management framework and the climate risk reporting their supervisor expects.
speaks at your conference
speaks at your conferenceLiliana Locke speaks on climate finance access for small island states, climate risk for banks, gender and climate finance, and small business resilience, at regional forums such as the Asian Development Bank (ADB) Asia Clean Energy Forum and the Global Green Growth Week.
