B.12/34: Initial risk appetite of the Fund

The Board, having reviewed document GCF/B.12/17 “Initial risk management framework: risk register, risk appetite update and Initial risk guidelines for credit and investment”:

1. Adopts the risk register as contained in annex XXVIII and requests the Risk Management Committee to review probability, impact and resulting priorities prior to the thirteenth meeting of the Board. The risk register will be updated at least once a year;
2. Takes note of the development of the other elements of the risk management framework;
3. Also takes note of the progress in developing the risk appetite of the GCF;
4. Reiterates that the GCF is an institution promoting the paradigm shift, in the context of sustainable development, towards low‐emission and climate‐resilient development pathways, and acknowledges that this involves taking risks that other institutions/funds may not be able or willing to take;
5. Requests the Secretariat, in consultation with the Risk Management Committee, to present the Interim risk and investment guidelines at the thirteenth meeting of the Board with revised financial instrument parameters;
6. Decides that the Interim risk and investment guidelines will expire the earlier of (i) the fifteenth meeting of the Board, or (ii) at the adoption of an updated set of risk policies and guidelines;
7. Requests the Risk Management Committee, with support from the Secretariat, to prepare and present to the Board for its consideration, no later than the fifteenth meeting of the Board, an updated set of risk policies and guidelines that include internal risk ratings methodologies, which should consider a differentiation of risks between adaptation and mitigation;
8. Further requests the Secretariat to monitor and report to the Board at each Board meeting:
   
   1. The amount of GCF funding approved;
   2. The amount of GCF funding approved plus the submitted amount for approval at the specific Board meeting;
   3. The accumulated fund disbursed by each accredited entity, country and result area, and
   4. Any changes in priorities of the risk register; and
9. Takes note that the Secretariat will produce risk manuals for the GCF financial instruments, asset and liability management, liquidity, and market risk before the end of 2016;
10. Recognizes that while the GCF monitoring and accountability framework for accredited entities as set out in annex I to decision B.11/10 requires accredited entities to provide annual performance reports, including financial management reports, to the GCF, the GCF is required to prepare financial risk management summaries on a quarterly basis pursuant to annex II to decision B.07/05. Accordingly, such summaries may only reflect the risk categories applicable to the performance and projects of accredited entities on an annual basis; and
11. Requests the Secretariat to recruit, as a matter of urgency, staff with risk management expertise.