Client Profile
The client is one of the largest banks in the Philippines, with a widespread network of over 1,000 branches, 3,000 ATMs, and numerous corporate offices across the country. As a leading financial institution, the bank plays a crucial role in supporting the country’s economic development and growth.
The Challenge
The Philippines, being an archipelagic country, is highly vulnerable to a wide range of natural disasters, including typhoons, floods, earthquakes, and volcanic eruptions. These environmental risks not only threaten the safety of the bank’s employees and customers, but also pose significant financial and operational risks to the institution.
The bank recognized the need to proactively assess and mitigate these environmental risks to ensure the resilience of its operations and the protection of its assets and investments.
The Solution: GreenFi’s Environmental Risk Assessment (ERA)
To address this challenge, the bank partnered with GreenFi to implement its Environmental Risk Assessment (ERA) tool. ERA is a comprehensive geospatial-based risk assessment solution that allows the bank to identify, measure, and mitigate physical climate and environmental risks across its operations and lending activities.
Integration with the Bank’s Processes
1. Credit Risk Management: The bank integrated the environmental risk scores derived from ERA into its credit review process. This enabled the bank to assess the physical risk exposure of its clients’ assets, collaterals, and locations, and make informed decisions on risk-mitigating measures, such as project relocation, engineering interventions, and insurance coverage.
2. Operational Risk Management: The bank leveraged ERA to map the environmental risk exposures of its corporate offices, branches, and machines (ATMs, cash deposit machines) across the country. This information was incorporated into the bank’s real estate acquisition and leasing processes, as well as its business continuity planning.
Key Benefits and Outcomes
1. Comprehensive Risk Identification and Mitigation: The bank was able to assess its exposure to a wide range of environmental risks, including climate-related risks (flooding, typhoons, storm surges, and landslides), as well as other natural disasters (earthquakes and volcanic eruptions). This enabled the bank to implement targeted risk-mitigating measures, such as asset relocation, engineering interventions, and insurance coverage.
2. Resilient Operations and Business Continuity: By integrating ERA data into its business continuity planning, the bank was able to develop robust measures to ensure the safety of its employees, protect its assets, and restore operations in the event of natural disasters. This included regular evacuation drills, hazard protection guidelines, and hazard awareness seminars.
3. Sustainable Lending and Investment Decisions: The bank’s integration of ERA into its credit risk management processes allowed it to make more informed and sustainable lending decisions, considering the long-term environmental risks associated with its clients’ activities and assets.
4. Innovative Risk Management Approach: The bank’s adoption of GreenFi’s ERA tool demonstrated its commitment to staying at the forefront of innovative risk management practices in the banking industry. This positioning helped the bank enhance its reputation as a responsible and forward-thinking financial institution.
Conclusion
By partnering with GreenFi and implementing the Environmental Risk Assessment (ERA) tool, the large Philippines bank was able to effectively identify, measure, and mitigate its exposure to a wide range of environmental risks. This comprehensive risk management approach not only strengthened the bank’s operational resilience and financial stability but also positioned it as a leader in sustainable banking practices within the country’s financial sector.
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