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The need for financial institutions (FIs) to account for physical climate risks in their risk management has never been more urgent. As the impacts of climate change escalate, businesses must take proactive steps to under stand the level of risk they face and to minimize business disruption. This playbook focuses on physical risks (e.g., extreme weather events), which can lead to widespread damage to business and business activities, with severe financial implications. FIs (e.g., banks and non-banking financial companies) are especially at risk given their large exposure to other vulnerable industries through their credit or client portfolios. The rapidly evolving regulatory landscape increasingly requires FIs to account for these risks in their overall business strategy and core business activities, such as lending.

This playbook provides guidance to FIs on assessing the physical climate risks for their infrastructure investments, and steps they can take to manage these risks. The playbook covers strategies and tactics that financial institutions can follow to assess and manage their exposure to physical climate risks for the infrastructure assets and projects they support. The guidelines and recommendations attempt to illustrate how FIs can navigate the complexities of undertaking physical climate risk assessment for their assets. It is specifically designed keeping in mind the LMICs context.