What does it mean for a bank to be resilient amid increasingly severe physical risks? Beyond protecting its assets and portfolios, it means anticipating clients’ needs and financing investments that reduce their vulnerability.

In Latin America and the Caribbean, economic losses associated with disasters have reached approximately $360 billion over the past 50 years. These events put homes, industrial facilities, agricultural production, roads, and other assets at risk. Biodiversity loss and land degradation can further compound chronic risks.

Recent events illustrate the direct impact on lending, insurance, and guarantee portfolios. In Rio Grande do Sul, Brazil, flooding in May 2024 triggered a humanitarian crisis and caused an estimated $15 billion in economic losses. The agricultural sector recorded $2.4 billion in losses, while housing damage exceeded $920 million.

In Argentina, the 2022 and 2023 drought associated with La Niña resulted in nearly $20 billion in losses in agricultural production and exports. This experience is now compounded by the 2026–2027 El Niño phenomenon, whose intensity could heighten the risk of floods and droughts across parts of the region, with consequences for economic activity and the financial sector.

Risks, but Also Opportunities

For financial institutions, these risks can have a direct financial impact: weakened client repayment capacity, greater financing needs for post-disaster recovery, business interruptions, declining asset and collateral values, higher insurance claims, and greater concentrations of risk in certain sectors or geographic areas. But exposure to physical risks is only one part of the equation.

The growing vulnerability of companies and assets also creates significant investment needs for adaptation and resilience. Sectors such as agriculture, housing, infrastructure, water, energy, construction, industry, transport, and tourism need to protect assets, minimize business disruptions following catastrophic events, reduce expected losses, strengthen supply chains, and adapt their operations to emerging risks.

This creates an opportunity for banks to move from reacting to anticipating. Instead of focusing only on mitigating losses and restructuring portfolios after an event has occurred, banks can measure their exposure to droughts and floods, integrate monitoring indicators into their strategies and governance, and prepare for potential prudential requirements from regulators.

Most importantly, banks can turn these risks into business opportunities by financing investments that reduce their clients’ vulnerability, such as efficient irrigation, drainage, storage, and power infrastructure, and by working with insurers and the real economy to develop better risk-transfer products. In this way, resilience is no longer viewed solely as a cost. It becomes an opportunity for collaboration and business development that creates value for all parties.

Turning these risks and opportunities into action requires sharing knowledge, identifying common challenges, and developing collective solutions.

First Regional Think Tank on Resilient Banking

In 2025, the IDB Group launched Ready and Resilient in the Americas, and in 2026, IDB Invest launched Ready & Resilient Enterprises, a regional initiative designed to strengthen disaster resilience in Latin America and the Caribbean, focusing on governance for risk prevention and reduction, disaster preparedness, and rapid response.

As part of these efforts, the first regional think tank on resilient banking was held in Buenos Aires on September 23 and 24. It brought together 18 banking and insurance representatives from Argentina, Colombia, Costa Rica, Guatemala, Mexico, Panama, and Paraguay, primarily executives and specialists in risk management and sustainability. IDB Invest and Fundación BASE facilitated the meeting using a participatory approach to identify challenges and develop proposals.

The objective was to identify and prioritize barriers and opportunities for integrating resilience into financial-sector business models, connecting the identification and valuation of physical risks with proactive risk management and new business opportunities to finance adaptation investments.

Key Takeaways from the Meeting

Participants identified several mutually reinforcing barriers: difficulties translating physical risks into financial impacts and business cases; insufficient integration of data and tools into origination and portfolio management; complex eligibility criteria; financial products and incentives that do not adequately reflect the benefits of adaptation; and gaps in capacity building and internal coordination. On nature and biodiversity, participants also highlighted the challenges of identifying bankable investments and assessing smaller transactions.

Through a co-creation exercise, participants proposed solutions including risk analysis and management tools, commercial training, governance mechanisms, tailored eligibility methodologies, portfolio reviews, new financial product proposals, and stronger coordination with insurers.

These results lay the groundwork for a regional roadmap to guide IDB Invest’s next steps. The challenge now is to put these proposals into practice and move toward a resilient banking model that can anticipate risks, generate business opportunities, and mobilize more private capital for adaptation and resilience.