Integrating Climate-Related Risk Management into Our Processes We manage climate-related risks in alignment with the key characteristics of primary risk types, including credit, market, liquidity, and non-financial risks. Climate-related risk considerations have been embedded into our risk policies and guidelines to ensure a comprehensive and integrated approach. Credit • CCPT DDQ: • Adopted BNM’s CCPT DDQ to classify exposures into the six CCPT classifications prescribed by BNM. • Embedded this framework into the non-retail credit risk assessment process during new customer onboarding and annual reviews of existing customers. • Climate-related Credit Risk Reports: • Developed and presented climate-related credit risk reports to relevant risk committees to monitor and review the climate risk profile of exposures. • Reports enable analysis and monitoring of the portfolio, focusing on: • Distribution of CCPT classifications. • Transition risk profile by sector. • Physical risk profile by location. • Sector concentration risk. • Incorporated transition and physical risk analyses into probability of default (PD) and loss given default (LGD) models to quantify the financial impact of climate-related risks. • Climate Sector Review Framework: • Leverages insights from climate-related credit risk reports and the CRST. • Prioritises climate-sensitive sectors and customers for targeted actions and strategy development. • Pilot Programme for Climate Risk Metrics Integration: • Launched a pilot programme to integrate climate risk metrics into the non-retail credit risk assessment process. • Focused on understanding customers’ transition and physical risk profiles during onboarding and annual reviews. • Initial pilot targeted PLCs within the corporate segment, generating valuable insights for future enhancements. Integration into Our Climate-related Risk Management Risk Type Accommodation and food service activities 1% Mining and quarrying 1% Agriculture, forestry and fishing 3% Manufacturing 3% Information and communication 5% Real estate activities 8% Electricity, gas, steam and air conditioning supply 8% Wholesale and retail trade; repair of motor vehicles and motorcycles 4% Construction 8% Transportation and storage 9% 10% Financial and insurance/takaful activities 28% Water supply, sewerage, waste management and remediation activities 12% Others BIMB Financing exposure based on BNM industry sector Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2024 132 Sustainability Statement
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