Bank Negara Malaysia’s Proposed Climate Risk Regulation is a Signal to Financial Institutions Across Islamic Markets to Start to Prepare

Bank Negara Malaysia (BNM) has an Exposure Draft open for comment through the end of March 2022 about how Malaysian banks and insurers will need to prepare for climate risksModeled on the Basel principles for climate risk management & supervision, these show how quickly Islamic markets regulators may move on climate-related risks in the financial sectorFinancial institutions should expect a lengthy, complex but rewarding process to transform their risk assessment and management systems to cover climate risks and to build a culture that can respond to changes in how climate-related risks affect their businesses

Malaysia’s central bank, BNM, will lead the way among Islamic markets with its climate stress testing and scenario analysis requirements, for which it has an open consultation....