Adapting banking business models to climate change: effective risk mitigation strategies

This article explores strategies to mitigate the risks associated with climate change and their integration into key business processes of banks. With the increasing impact of climate change on the financial sector, banks are faced with the need to adapt their business models to effectively manage climate risks. The analysis of best practices and innovative approaches to assessment and management of climate risks in the banking sector is carried out. Attention is focused on the role of ESG factors (environmental, social and managerial) in the transformation of banking business models and increasing the sustainability of financial institutions. The integrated climate risk management model (IMUCM) developed by the author is described, which combines risk assessment methods, digital technologies and ESG metrics. The proposals presented in the article are aimed at stimulating the implementation of the principles of sustainable development and low-carbon technologies in the banking industry by integrating IMUCR into the strategic planning and operational activities of banks, which is of particular importance for ensuring the long-term competitiveness and stability of the financial system in the context of the transition to a low-carbon economy. The potential benefits of implementing IMUCR are being considered, such as improving the reputation of banks, attracting new customers focused on environmentally responsible business, and reducing the risks associated with climate change. The results of the study show that investments in IT infrastructure, data and staff competencies necessary for the successful implementation of the IWRM are strategically justified and payback in the long term, given the growing importance of climate risks and the expectations of regulators and society regarding the sustainable development of the financial sector.