Biodiversity and Nature Loss Risk Assessment
Other → Ethical/ESG Risk
| 2025-11-05 13:05:57
| 2025-11-05 13:05:57
Introduction Slide – Biodiversity and Nature Loss Risk Assessment
Understanding Biodiversity and Nature Loss Risk for Financial Stability
Overview
- Biodiversity and nature loss pose significant systemic risks for financial institutions.
- Assessing these risks supports better decision-making and regulatory compliance in ESG contexts.
- We will cover risk drivers, assessment methodologies, sector exposures, and financial implications.
- Key insights include integrated risk frameworks and scenario analyses highlighting risk exposure and mitigation needs.
Key Discussion Points – Biodiversity and Nature Loss Risk Assessment
Drivers and Impacts of Biodiversity and Nature Loss Risks
Main Points
- Major drivers include habitat degradation, species loss, and ecosystem service decline impacting economic sectors.
- Financial risks manifest via dependencies and impacts on sectors like agriculture, food, and natural resources.
- Risk assessment frameworks use qualitative and quantitative metrics including scenario analysis and exposure mapping.
- Implications include material financial losses, portfolio value shifts, and regulatory pressures to integrate nature risks.
Graphical Analysis – Biodiversity and Nature Loss Risk Assessment
Risk Exposure Across Sectors in the EU Economy
Context and Interpretation
- This chart visualizes sectoral exposure to biodiversity risks, highlighting agriculture and forestry as highly vulnerable.
- Trends show amplified risk in sectors dependent on ecosystem services with varying materiality.
- Highlights transmission channels from ecological degradation to financial impacts.
- Insights inform prioritization of risk management efforts and regulatory focus.
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Scenario-Based Financial Risk Assessment
- This visualization illustrates projected financial losses under different biodiversity and climate policy scenarios for the agricultural sector.
- Comparisons show higher losses in business-as-usual and climate-only policies versus integrated climate-nature policies.
- Captures dependencies and potential transition risks affecting portfolio valuations.
- Key insight: integrated policy approach mitigates but does not eliminate risks.
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Qualitative and Quantitative Insights with Sectoral Data
Key Discussion Points
- Strong biodiversity dependencies create material financial risks in high-exposure sectors such as agriculture and forestry.
- Quantitative scenario models aid in translating ecological impacts into financial terms.
- Limitations include data uncertainty and modelling assumptions impacting risk precision.
- Important to incorporate cascading risks and feedback loops in comprehensive assessments.
Sector Exposure and Dependency Scores
Estimated exposure and dependency metrics indicating vulnerability to biodiversity risks.
| Sector | Exposure Score (0-100) | Dependency Score (0-100) | Materiality Level |
|---|---|---|---|
| Agriculture | 90 | 85 | High |
| Forestry | 75 | 80 | High |
| Fisheries | 70 | 78 | Medium |
| Manufacturing | 40 | 30 | Low |
Conclusion
Summary and Recommendations
- Biodiversity loss represents a growing, material financial risk requiring integrated assessment approaches.
- Scenario analysis and sectoral exposure metrics support informed risk management and investment strategies.
- Next steps include enhancing data quality, harmonizing frameworks, and embedding nature risks in financial regulation.
- Recommendations urge active monitoring of biodiversity impacts and alignment with climate policy for holistic risk mitigation.
