Climate Financial Risk Forum (CFRF)

The Climate Financial Risk Forum (CFRF) is a leading industry initiative, jointly established by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) in 2019. Its mission is clear: to enhance the financial services industry's ability to manage climate-related risks and opportunities through strategic risk management.

Bringing together senior leaders from across the financial services industry, the CFRF provides a collaborative platform to shape best practice and accelerate progress. The CFRF Steering Group oversees specialist Working Groups, which develop cross-sectoral practical guidance, case studies, and tools which help firms integrate climate considerations into strategic risk management.

While the FCA and PRA facilitate CFRF discussions, the views in these publications don’t necessarily represent the views of the regulators and are not regulatory guidance.

In October 2025, the CFRF issued its latest suite of publications, each of which is accessible below:

• From Risk to Resilience: Integrating adaptation into finance.
• Skilling Up: Training available on physical risks of climate change in the financial sector.
• A Risk Professional’s Guide to Physical Risk Assessments: A GARP Benchmarking Study of 13 Vendors.
• Quantitative Climate Scenario Analysis in Financial Decisions Case Studies.
• Developing an approach to nature risk in Financial Services.
• 2025 Online Climate Scenario Narrative Tool[1].

CFRF Adaptation Working Group publications October 2025

Co-Chairs: Alex Kennedy, Standard Chartered and Cath Bremner, Partners in Performance
Secretariat: Alasdair Grainger and Alexandra Qayum, Grant Thornton

From risk to resilience: Integrating adaptation into finance

From Risk to Resilience: Integrating Adaptation into Finance (PDF)[2]
From Risk to Resilience: Integrating Adaptation into Finance - Executive Summary (PDF)[3]

As physical climate risks intensify, the financial sector faces growing pressure to move from high-level strategies to practical, operational responses. The 2025 report of the CFRF Adaptation Working Group provides a toolkit to help financial institutions integrate resilience into decision-making across asset classes, sectors, and geographies.

Building on the 2024 report Mobilising Adaptation Finance to Build Resilience, this year’s output focuses on data, modelling, and incentive-based mechanisms that can mainstream adaptation into financial systems, from granular asset-level assessments to sovereign risk analysis.

The report looks into:

• Practical frameworks and tools: including updates to the Aim–Build–Contingency (ABC) framework, adaptation-inclusive transition plans, and methods to strengthen data, modelling, and scenario analysis;
• Financial mechanisms: from pricing, capital, and product design levers that reward resilience, to approaches for embedding adaptation value into credit modelling and investment decisions; and
• How adaptation can be incorporated at multiple system levels, from asset-level flood risk to sovereign creditworthiness and international finance access.

Skilling Up: Training available on physical risks of climate change in the financial sector

Skilling Up: Training available on physical risks of climate change in the financial sector (PDF)[4]

Financial institutions should identify their specific training needs around physical climate risks and implement plans on how they can be addressed.

Regulatory bodies in the finance sector should consider the knowledge gaps around physical climate risk and how they can encourage training to support updates to guidance, standards and regulation. 

Training providers should consider providing additional training products to fill the gaps identified in this report.

CFRF Climate Financial Resilience Working Group publications October 2025

Chair: Billy Suid, Barclays
Secretariat: Jo Paisley and Maxine Nelson, Global Association of Risk Professionals (GARP)

A Risk Professional’s Guide to Physical Risk Assessments: A GARP Benchmarking Study of 13 Vendors

A Risk Professional’s Guide to Physical Risk: Assessments A GARP Benchmarking Study of 13 Vendors (PDF)[5]

Despite uncertainties, the increasing frequency and severity of physical risks from climate change are clear. Financial institutions need to develop internal expertise, engage thoroughly with vendors, and use robust due diligence to manage these risks effectively.

This document is a comprehensive benchmarking study conducted by the Global Association of Risk Professionals (GARP) on behalf of the Climate Financial Risk Forum (CFRF). It assesses the variability and methodologies of physical risk assessments provided by 13 third-party vendors. The study focuses on how physical risks from climate change — such as flooding, cyclones and windstorms — are modeled at the asset level and the extent to which vendor estimates differ.

The study highlights significant dispersion in hazard and damage estimates across vendors, with some properties assessed as highly exposed by some vendors but not by others. Estimates of vulnerability and damage ratios also vary considerably.
The study highlights a range of reasons for the divergences, including modeling approaches, differences in data and metrics.  

The study can help financial institutions navigate the complex landscape of physical risk modeling, providing a checklist for financial institutions to consider when selecting vendors and conducting physical risk assessments.

Quantitative Climate Scenario Analysis in Financial Decisions Case Studies

Quantitative Climate Scenario Analysis in Financial Decisions Case Studies (PDF)[6]

This paper presents a set of 9 case studies quantifying the financial impacts from climate scenarios. They have been authored by financial institutions, academia and data and analytics providers and offer a diverse perspective, as they cover a range of asset classes, geographies, risk types and scenario severity.

Comparing and contrasting each case studies approach and results can assist financial professionals in their effort to quantify the financial risks of climate change, manage them and meet regulatory expectations. The case studies provide concrete and transparent quantified scenario analysis examples. 
As a combined paper, it can help benchmark against peers, inspire new use cases or methods, and support risk-based internal discussions. It provides examples of the latest forward-looking quantitative climate scenario analysis, an important tool whose practice within the industry is still developing.

These case studies provide useful takeaways for financial professionals looking to perform climate scenario analysis on their portfolios:

1. Consider adaptation capacity in sovereign risk analysis. It can materially affect the financial impact and helps assess the case for investment in adaptation.
2. Assess both direct and indirect physical risks. While direct risks (impact on a company’s own physical assets) are easier to model, the indirect risk (eg, via supply chains) can be significant and increase materially over time.
3. In addition to one-time event-driven shocks, consider the impact of the recurrence of physical risk events. One-time shock may cause temporary business interruptions or repair costs; while recurring hazards could drive continuing increases in operating expenses and over time may lead to a significant impact on the company’s financial profile.
4. Consider company specifics and the carbon 'value chain' within a sector. The financial performance of companies within a sector can vary greatly. In addition to a firm’s own emission profile or direct carbon costs, it matters how these costs are absorbed or passed along the value chain. This pass-through can reshape the competitiveness of the upstream and downstream players and may accelerate the adoption of alternative climate solutions, which can ultimately transform the industry value chain.  

Developing an approach to nature risk in Financial Services

Developing an approach to nature risk in Financial Services (PDF)[7]

This publication is the second handbook from the CFRF Nature-Related Risk Working Group, focusing on nature-related financial risks and its implications for financial services. It provides practical guidance for banks, insurers, and asset managers to understand, assess, and manage nature-related risks alongside climate risks. The paper builds on the introductory 2024 handbook, offering new case studies, systemic risk assessment principles, and actionable steps for integrating nature risk into financial decision-making.

Financial professionals can use this handbook to:

• Deepen their understanding of how climate and nature risks are interconnected and why both must be considered together.
• Apply frameworks such as TNFD’s LEAP to identify, evaluate, and prepare for nature-related risks in their portfolios.
• Further understand emerging best practices, scenario analysis approaches, and real-world case studies.
• Inform internal discussions, risk management strategies, and regulatory engagement by leveraging practical tools, data sources, and scenario narratives provided in the paper.

The paper highlights several key messages for financial institutions: 

• Nature and climate risks are deeply interconnected and can amplify each other. Ignoring these links can lead to underestimating systemic risks and missing opportunities for effective risk mitigation and value creation.
• Systemic risks from nature loss are material and can propagate through financial systems. These risks can arise from compounding, cascading, and contagion effects – such as supply chain disruptions, asset devaluation, and macroeconomic shocks – making holistic risk assessment essential.
• Practical steps and tools are available now. Financial institutions can start by conducting nature 'heatmap' assessments, integrating nature risk into scenario analysis, and collaborating with peers and regulators to build capability. The handbook provides concrete examples, data sources, and frameworks to support immediate action.

2025 Online Climate Scenario Narrative Tool

Interactive tool generating a summary of climate-related risks and opportunities for firms based on business activities models, products, risks of the firm. Uses data from scenarios by the Central Banks and Supervisors Network for Greening the Financial System (NGFS).

Key updates include:

• Alignment with the latest NGFS Long-Term Scenarios Phase V (November 2024) and signposting to the NGFS Short-Term Scenarios (May 2025).
• A new charting feature for generating standalone graphs has been introduced. This is ideal for presentations and bespoke analysis, providing a more flexible and user-friendly experience.
• Highlights of the scenarios limitations and assumptions to support a better understanding of the scenarios and their context, to enable effective use the tool's outputs.

October CFRF 2024 publications

In October 2024, the CFRF published guides on 3 key areas of climate risk:

Nature-related Risk: Handbook for Financial Institutions (PDF)[8]

• Aim of publication: Provides an introduction for financial institutions to help frame nature as a risk, and discusses emerging practices in incorporating nature into financial risk management.
• Industry need: Increasing industry discussion and interest in nature-related risk.
• Supporting documents:
  • Nature-related Risk: Technical Data Guidance for Financial Institutions (PDF)[9]
  • Nature-related Risk: summary document (PDF)[10]

Short-term Scenarios (PDF)[11]

• Aim of publication: To discuss the various use cases of short-term scenarios for banks/asset managers/insurers to provide more guidance to firms.
• Industry need: Growing interest in and use of short-term scenarios.
• Supporting documents:
  • Short-term Scenarios: summary document (PDF)[12]

Mobilising Adaptation Finance to Build Resilience (PDF)[13]

• Aim of publication: Provide guidance for the industry to assess physical risks they face and to facilitate increased levels of investment into climate adaptation to respond to those risks as an opportunity.
• Industry need: Challenges in understanding and pricing physical climate-related risks.
• Supporting documents:
  • Mobilising Adaptation Finance to Build Resilience: summary document (PDF)[14]
  • Adaptation user survey (PDF)[15]
  • Adaptation case studies (PDF)[16]

2025 CFRF Steering Group Membership