December 21, 2022
DFS SUPERINTENDENT HARRIS PROPOSES GUIDANCE FOR NEW YORK STATE-REGULATED BANKING AND MORTGAGE INSTITUTIONS RELATING TO MANAGEMENT OF SAFETY & SOUNDNESS RISKS FROM CLIMATE CHANGE
Proposal Supports Institutions as They Respond to Evolving Risks to Their Operational Resiliency
Guidance Seeks Industry Input to Issue Final Guidance
New York State Department of Financial Services (“DFS”) Superintendent Adrienne A. Harris today announced new proposed guidance for New York State-regulated banking and mortgage institutions (“Institutions”) to help them manage safety and soundness risks related to climate change.
DFS is issuing the proposed guidance to support efforts by Institutions to identify, measure, monitor, and control their material climate-related financial risks, consistent with existing risk management principles. DFS also sought to align the guidance with the work of federal and international banking regulators on the management of climate-related financial risk.
“Regulators must anticipate and respond to new risks to operational resiliency and safety and soundness, jeopardizing an institution’s future,” said Superintendent Harris. “DFS is committed to working with all stakeholders to further refine expectations and finalize guidance appropriate for Institutions to address material climate-related financial risks.”
The guidance focuses on the following components of prudent risk management by Institutions: corporate governance; internal control framework; risk management process; data aggregation and reporting; and scenario analysis. Institutions are expected to minimize and affirmatively mitigate adverse impacts on low- and moderate-income communities while managing climate-related financial risks.
DFS views the proposed guidance as a basis for supervisory dialogue. Building on the feedback DFS obtained from regulated entities and key stakeholders in developing the proposed guidance, DFS encourages and seeks input as it formulates the final guidance with a proportionate, data-driven approach. Collaboration and continuing conversations with external stakeholders—from consumer advocates, the Legislature, and industry, to banking regulatory counterparts—is critical to developing balanced and practical guidance.
Interested parties are encouraged to provide feedback on the proposed guidance by March 21, 2023. The proposed guidance and instructions for providing feedback can be found on the Public Feedback section of the Climate Change page on DFS’s website.
On January 11, 2023, at 10:30 a.m. EST, DFS will be hosting a webinar to provide an overview of the proposed guidance. Please register here.