Integrating E&S risk in credit & operation risk management to align with central bank requirements

Systematically integrate E&S risk and develop sustainable finance framework in line with regulatory requirements.

Leading Asean-Based Commercial Bank

End-to-end E&S risk integration across lending lifecycle and regulatory compliance.

A leading commercial bank was under regulatory pressure to integrate E&S risk in governance and risk management framework. The integration policy and process had to align with the bank's overall risk appetite and credit strategy. Furthermore, the process required buy-in across all functions, internal and external stakeholders, and senior management.

Crisil's approach involved,

• Benchmarking existing E&S policies and governance structure with international standards and other banking peers, provided gap assessment.
• Preparing E&S policy statements, E&S risk appetite statement, and E&S strategy aligned with overall risk appetite and credit strategy of the Bank.
• Designing tools, templates, and questionnaires to identify, assess, and measure E&S risks.
• Providing guidelines and frameworks for E&S risk monitoring and reporting dashboards.
• Preparing sector notes on high-risk industries.
• Drafting stress testing exercise guidelines for internal capital planning.
• Designing guidelines for integrating E&S considerations into treasury operations.
• Drafting sections of the Bank’s sustainability report.

• Crisil's collaboration with the Bank enabled the successful implementation of the Sustainable Finance Framework and integration of E&S considerations into the Bank's credit and operations risk management systems ahead of the regulatory deadline.
• Crisil provided focused training to the Bank's staff on the use of the tools, templates, and questionnaires for identifying, assessing, measuring and monitoring E&S risks.