Measuring exposure at risk key to manage climate events: RBI

RBI Deputy Governor Rao mostly focused on the role of central banks in managing the outcomes from climate change

Stating that the consequences, intensity, severity, and frequency of climate events were hard to measure and difficult to predict, the Reserve Bank of India (RBI) Deputy Governor M Rajeshwar Rao noted that the first step for banks and other regulated entities must take is to measure the amount of exposure at risk.

“The impact of these events (climate events) on banks and financial institutions is even more difficult to quantify. Therefore, the first step in managing the risks to which banks and other regulated entities are exposed from climate events is to measure the amount of exposure at risk,” Rao said at a panel discussion on ‘Climate Implications for Central Banking’ organised by the IMF and Center for Social and Economic Forum last week. The excerpts of the speech were made available by the RBI on Tuesday.