Integrating ESG and Climate Risk into Modern Risk Management

Paolo Capelli begins by acknowledging that most traditional risk management frameworks were designed solely for financial and liquidity risk - leaving out environmental, social, and governance (ESG) factors. At Itas, he has led the integration of climate and sustainability risks into the organization’s risk assessment processes, ensuring they are treated as core drivers of financial performance and resilience. He discusses how the shift toward sustainability requires both cultural and methodological transformation across institutions.

In the second half, Capelli explains how quantitative tools and stress testing models are being expanded to capture the potential financial impact of climate change. He advocates for long-term thinking, scenario planning, and data granularity to ensure decisions reflect emerging ESG exposures. By embedding climate considerations into every layer of risk management, Capelli demonstrates how financial firms can move from compliance-oriented practices to truly sustainable, forward-looking strategies.