Banks’ transition plan dependencies: from risks to opportunities

An important element of banks’ transition planning are factors that affect their ability to deliver on their strategic transition commitments, known as ‘dependencies’. They are also essential to assessments of banks’ risk management frameworks. Yet such assessments often underplay banks’ role as intermediaries that will channel finance across the economy over the course of the transition. This policy insight explores new approaches to managing banks’ dependencies, with the aim of improving risk governance and providing a clearer view of transition-related opportunities. The authors focus on the new concept of ‘intermediated dependencies’, which arise where the delivery of a bank’s transition strategy depends on the behaviour, capacity or choices of clients and counterparties, and where outcomes are neither wholly external nor fully within the institution’s control.