Compliance Briefing — December 30, 2021
The Hong Kong Monetary Authority issued Supervisory Policy Manual module GS-1, setting climate risk management expectations for authorized institutions.
Executive briefing: On December 30, 2021, the Hong Kong Monetary Authority (HKMA) released Supervisory Policy Manual module GS-1 Climate Risk Management, formalising governance, strategy, risk management, and disclosure expectations for banks operating in Hong Kong.
Immediate compliance priorities
- Governance alignment. Assign board-level accountability for climate risk strategy and oversight, ensuring management committees integrate climate considerations into decision-making.
- Risk integration. Embed climate factors into credit, market, liquidity, and operational risk frameworks, including scenario analysis and stress testing.
- Data and disclosure. Develop data inventories and control processes to support HKMA’s expectation for quantitative and qualitative climate risk disclosures.
Control alignment
- Policies and limits. Update risk appetite statements, lending policies, and sectoral limits to account for transition and physical risk exposures.
- Internal audit. Plan assurance reviews covering climate governance, data quality, and stress-testing methodologies.
- Capability building. Train front-line, risk, and finance teams on climate risk drivers, scenario design, and reporting duties.
Enablement moves
- Leverage HKMA’s "Common Assessment Framework" to benchmark programme maturity and prioritise remediation.
- Coordinate with industry consortia such as the Green and Sustainable Finance Cross-Agency Steering Group for data sharing initiatives.
- Integrate climate metrics into ICAAP and recovery planning submissions.
Sources
- HKMA circular announcing GS-1 Climate Risk Management module
- Supervisory Policy Manual GS-1 Climate Risk Management
Zeph Tech equips banks with HKMA-aligned climate risk frameworks, stress-testing models, and disclosure playbooks.