Banks at risk from drought, reveals groundbreaking research

Drought Fotolia 230x150
By Jon Hay
13 Apr 2017

A glimpse of the future has arrived with the publication of a report modelling the credit risk banks face from drought. The effect on loan portfolios could be severe — and the research illustrates the new kinds of risk management banks will have to do as the world’s climate becomes more volatile.

Nine banks including Citigroup, Santander and UBS worked on the project.

“There’s a preconception that drought is primarily a risk for agriculture and food production,” said Stephen Moss, director of capital markets solutions at Risk Management Solutions (RMS) in London. “But every industry has some reliance on water, ...

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