B.07/05: Fund’s financial risk management and investment frameworks: Financial risk management framework

The Board, having reviewed document GCF/B.07/05 Financial Risk Management Framework:

  1. Recognizes that the initial financial risk management framework focuses on the financial risk environment that the Fund will encounter in its operations;
  2. Adopts the Fund’s initial financial risk management framework as contained in Annex XI and Annex XIII to this document;
  3. Takes note of the Fund’s financial risk categorization and management as contained in Annex XII to this document;
  4. Decides that the risk monitoring and reporting management system listed in table 1 of Annex XI to this document will be made operational before the Fund approves funding proposals;
  5. Requests the Secretariat, in consultation with the Risk Management Committee, to prepare an analysis of the Fund’s potential risk appetite under different key assumptions as part of its financial risk management framework. To this end:
    1. The Secretariat will provide, as a first step, a survey of methodologies used by relevant institutions to define and determine their risk appetite, for consideration by the Board at the third Board meeting of 2014;
    2. The Secretariat, in consultation with the Risk Management Committee, will present at the first meeting after the Fund’s initial resource mobilization a methodology for determining the initial risk appetite of the Fund, for approval of the Board; and
    3. The Secretariat to outline various scenarios, using the approved methodology, will support the Board in the setting of the Fund’s initial risk appetite.
  6. Decides to annually consider undertaking a review of the initial financial risk management framework, and to have an in-depth review no later than three years after the initial capitalization of the Fund;
  7. Requests that the Risk Management Committee, as part of its work programme, expand its analysis beyond financial risks to address other risks that the Fund may encounter.