According to principle 4 of the Basel Committee on Banking Supervision principles on incorporating climate-related financial risks into their internal control frameworks:

• The internal control framework should include a clear definition and assignment of climate-related responsibilities and reporting lines.
• Climate-related risk assessments may be undertaken during the client onboarding, credit application, and credit review processes and in ongoing monitoring and engagement with clients as well as in new product or business approval processes.
• The risk function should be responsible for undertaking climate-related risk assessment and monitoring independently.
• The internal audit function should provide an independent review and objective assurance of the quality and effectiveness of the overall internal control framework and systems.

Things to Remember