Quantifying and mitigating climate risk is becoming a priority for the U.S. federal government’s housing finance agencies and an increased emphasis on this risk will inevitably concern government-sponsored enterprises, servicers, lenders, investors, and others in the mortgage space.
In March 2022 the Securities and Exchange Commission proposed rule changes that would require registrants to include certain climate-related disclosures in their registration statements and periodic reports, including information about climate-related risks that are reasonably likely to have a material impact on their business, results of operations, or financial condition, and certain climate-related financial statement metrics in a note to their audited financial statements. The required information about climate-related risks would also include disclosure of a registrant’s greenhouse gas emissions, which have become a commonly used metric to assess a registrant’s exposure to such risks.
An important first step is the need to assess these risks in the context of other risks to your business. An immediate need is to address near-term board and regulatory reporting requirements, as well as voluntary public disclosure, as pressure by stakeholders to understand what actions are being taken by companies to address climate change builds.
To meet this need, mortgage analytics firm RiskSpan, in collaboration with Verisk, has created a first-of-its-kind solution for measuring and mitigating the risks of climate change to the housing finance industry that mortgage risk managers can use for incorporating climate risk into their enterprise risk management. These analytics can help organizations throughout the mortgage origination and servicing value chain assess the risk associated with both individual locations and broad portfolios including coastal and inland properties.
Read RiskSpan’s white paper, “Incorporating Climate Risk into ERM: A Mortgage Risk Manager’s Guide“