Financial Crime World

Financial Institution Risk Management in Guadeloupe: A Study Reveals Gaps in Nature-Related Risk Management Practices

A recent study by the Global Association of Risk Professionals (GARP) has shed light on the current state of nature-related risk management practices among financial institutions in Guadeloupe, highlighting a lack of expertise and inconsistent approaches to managing these risks.

Regulatory Expectations and Board Oversight

  • Over a third of firms reported that their regulators have published formal expectations for nature risk management.
  • Another 13% expect their regulators to publish such expectations in the near future.
  • Nearly half of the boards surveyed have oversight of nature-related risks and opportunities, but many others are still working on this.

Expertise and Understanding

  • Over 40% of firms are still investigating whether nature risk should be treated as a risk at all, highlighting the need for further education and training.
  • Only 17% of firms are using metrics, targets, or limits to assess drivers of nature-related risks, with another 13% implementing these measures.

Positive Developments

  • There is an increase in nature-risk staffing and training, with around half of firms offering nature-risk training to some functions and 13% of firms offering it to their entire staff.
  • However, this is still not enough to bridge the gap in expertise and understanding.

Conclusion and Recommendations

The study’s findings are a wake-up call for financial institutions in Guadeloupe to prioritize nature risk management and ensure that they are adequately prepared to manage these risks. As the global community continues to grapple with climate change and its impacts on the economy, it is essential that financial institutions take proactive steps to mitigate their exposure to nature-related risks.

The study was co-authored by Dr. Jo Paisley, President of GARP Risk Institute, and Dr. Maxine Nelson, Senior Vice President, drawing from their extensive experience in risk management across various industries. Their findings provide valuable insights for financial institutions in Guadeloupe and beyond to improve their approach to nature-related risk management.

References

  • Global Association of Risk Professionals (GARP). (2022). Financial Institution Risk Management in Guadeloupe: A Study Reveals Gaps in Nature-Related Risk Management Practices.