OCC names chief climate risk officer to lead new office

The banking regulator announced the addition to its leadership ranks Monday. Chen will oversee the OCC’s new Office of Climate Risk and spearhead the agency’s climate risk efforts related to supervision, policy, and external engagement. She will report to Acting Comptroller of the Currency Michael Hsu.

Chen joins from the New York State Department of Financial Services (NYDFS), where she served as the first executive deputy superintendent of the Climate Division. She succeeds Jonathan Fink, who had been the OCC’s chief climate risk officer on an acting basis since March in addition to advising Hsu.

“I am excited to welcome Dr. Chen to the OCC,” said Hsu in a press release. “We are fortunate to have someone with her background and experience in both finance and climate-related financial risk to lead the agency’s risk management work in this area.”

Among his first moves leading the OCC, Hsu created the climate change risk officer position. Darrin Benhart was appointed to the role in July 2021; Benhart has since departed the agency and joined KeyBank as its chief enterprise risk officer.

“The physical and transition risks associated with climate change pose safety and soundness challenges for banks,” Hsu said during a speech at an industry event last week. “There is an urgent need for action.”

The OCC in December 2021 published draft guidance listing six general principles for identifying, measuring, monitoring, and controlling the potential physical and transitional risks posed by climate change to large banks. Hsu said the agency “heard from thousands of individuals” regarding the framework and is still sifting through the responses.

“The majority of commenters generally supported the draft principles, while some warned of regulatory overreach,” he said. “Most commenters who supported the principles also offered suggestions for changes, reflecting a range of views on the subjects that should be addressed in the guidance, the level of detail, and the focus on large institutions.”

The OCC is not alone in enhancing its regulatory attention paid to climate risks. The Federal Reserve is working with the agency to understand how climate change may pose risks to individual banks and to the financial system and considering how to develop and implement climate risk scenario analyses, Vice Chair for Supervision Michael Barr remarked in a speech last week. Meanwhile, the Securities and Exchange Commission and Commodity Future Trading Commission each formed climate task forces in 2021.

“With climate-related risks, I believe we are much more exposed to failures of imagination—not asking enough ‘what if?’ questions—than we are to failures of stringency or consistency,” Hsu said in his recent speech.

Prior to her work at the NYDFS, Chen served as director of conservation investments at the Nature Conservancy. She previously worked at Goldman Sachs and Royal Bank of Canada Global Arbitrage and Trading.