13 These risks may include severe weather events that can disrupt standard clearing and settlement activity and increase the demand for cash. Banks also need to manage risks surrounding potential loan losses resulting from business interruptions and bankruptcies associated with natural disasters, including risks associated with loans to properties that are likely to become uninsurable or activities that are highly exposed to climate risks.
Climate Change and Community Reinvestment The Federal Reserve also has important responsibilities in community reinvestment, which increasingly encompass recovering from and building resilience against natural disasters and severe weather events. Under the Community Reinvestment Act (CRA), banks have an affirmative obligation to meet the needs of their local communities, including low- and moderate-income communities.