Conference Recap: The Next Phase of Climate Risk Management

Research evidence excerpt

Conference Recap: The Next Phase of Climate Risk Management

EUROPE | Sustainability & Transition

Strategy June 16, 2026

Conference Recap: The Next Phase of Climate

Risk Management

We outline our main takeaways from the GARP Climate & Nature Risk

Symposium. KTs: 1) Regulators’ expectations on climate risk management

are maturing (e.g. PRA's SS5/25); 2) Climate risk model outputs should be

viewed as directional, scenario-based insights, not precise forecasts; & 3)

Industry participants are actively working to improve data standardisation,

enabling better comparability of climate risk model outputs across vendors.

Regulators are treating climate and nature risk as top supervisory priorities. The UK’s

Prudential Regulation Authority (PRA) now expects firms to embed climate risks in capital

adequacy assessments and treat climate change as a core prudential risk under new SS5/25

guidance, Enhancing banks’ and insurers’ approaches to managing climate-related risks (here).

Similarly, the European Central Bank (ECB) recently released extensive guidance for climate

and nature-related stress testing (here), acknowledging progress but stressing that much

remains to be done as these risks mount. Regulators have observed that many firms still

struggle with scenario analysis, data gaps, and adaptation planning, and will be ramping up

efforts to help firms close gaps on this front.

Emerging climate and nature risks demand new risk management approaches. Traditional

backward-looking risk frameworks falter under deep climate and ecological uncertainty.

Investors should look to companies using flexible, adaptive strategies (e.g. extreme scenario

stress-testing, supply-chain resilience, and regular risk assessment updates) to reduce risks