In its latest move to address the effects of climate change, the New York Department of Financial Services (DFS) announced a new climate risk division and appointed Dr. Nina Chen as its executive deputy superintendent.
Dr. Chen, DFS’ inaugural director of sustainability and climate initiatives, will lead the division as it works with its regulated entities to help manage their financial risks from climate change.
“We continue to focus on ensuring our regulated entities stay safe in the face of climate change, so the creation of this division just elevates the importance of this work and ensures its integration into our supervision of our insurers,” Dr. Chen told Insurance Journal.
In addition to supporting its regulated entities regarding climate change, DFS’ new Climate Risk Division will coordinate with international, national and state regulators, develop internal capacity on climate-related financial risks, support the capacity-building of peer regulators on climate-related supervision and ensure fair access to financial services for all communities, especially those most impacted by climate change, according to a DFS press release.
This comes as DFS has already taken steps to manage risks from climate change, serving as the first U.S. financial regulator to join the Network of Central Banks and Supervisors for Greenign the Financial System. The regulator is also a member of the Sustainable Insurance Forum, the global network of insurance supervisors and regulators who are working together on sustainability challenges facing the insurance sector.
The department in March issued proposed guidance for New York domestic insurers on managing the financial risks from climate change, which was open for a public comment period and establishes expectations that banks and insurers integrate the consideration of financial risks from climate change into their governance frameworks, risk management processes and business strategies.
“As one of the most critical issues of our generation, climate change poses wide-ranging and material risks to the financial system,” DFS Acting Superintendent Adrienne Harris said in an emailed statement. “This new division and Nina’s appointment position DFS at the forefront of climate-related financial supervision, fulfilling DFS’ mandate to ensure the safety and soundness of our regulated companies as they manage the financial risks from climate change, and support the roles of our institutions in advancing the low-carbon transition and enhancing communities’ resilience.”
Dr. Chen was appointed director of sustainability and climate initiatives at DFS in May 2020. She also serves as the vice-chair of the Climate Risk Steering Group at the International Association of Insurance Supervisors.
Before joining DFS, Dr. Chen was the Nature Conservancy’s director of conservation investments in New Jersey, and later in New York. She started her career in finance, which spanned a range of areas, including sovereign bonds, interest rates derivatives, mortgages and structured credit products, at Goldman Sachs and Royal Bank of Canada, among others.
Dr. Chen said that as climate change poses a material threat to the financial system, it’s imperative that DFS regulated entities, including insurers, are well prepared.
“We’re seeing the increase in extreme weather events. We just experienced Ida. We experienced the freeze in Texas … so I think it’s hard to argue that climate change is not impacting our society,” she said. “And it’s creating impacts on both the underwriting side, as well as the investment side.”
Topics New York Climate Change
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