PRA SS5/25 is the Prudential Regulation Authority's supervisory statement on managing climate-related financial risks — expecting UK insurers and banks to embed climate risk across governance, risk management, scenario analysis, data and disclosure, assessed through the channels by which it reaches the balance sheet.
SS5/25 sets out the PRA's expectations for how regulated firms identify, manage and disclose climate-related financial risk. Published on 3 December 2025 alongside policy statement PS25/25, it updates and replaces the earlier SS3/19 with immediate effect, raising the bar from climate awareness to an embedded, capital-relevant capability. It applies to UK banks, insurers, building societies and PRA-designated investment firms — including those in international groups, but not UK branches of third-country firms.
The core shift is from treating climate as a standalone reporting exercise to running it inside enterprise risk management — as a live input to the risk framework, the ORSA and capital, rather than an annual annex. The PRA expects firms to be able to show how climate risk flows through to the business and the balance sheet, not merely that it has been considered.
In practice, SS5/25 expects climate risk to be addressed across five connected areas — and to be assessed across the transmission channels through which physical and transition risk reach the firm.
Because SS5/25 expects climate risk inside the risk framework, the ORSA has to treat climate as a live driver of reverse stress tests, management actions and multi-year capital projections — with its impact on the SCR and own funds quantified rather than described.
That is difficult when climate lives in a separate dataset and the ORSA is rebuilt by hand each cycle. It becomes tractable when physical and transition scenarios sit in the same model that produces the ORSA, so a supervisory ask is a query against a running model rather than a fresh cross-team project. See how Abgalis approaches integrated ERM and climate, and how it compares to point tools and advisory-led integration.
SS5/25 is the Prudential Regulation Authority's supervisory statement on managing climate-related financial risks. It sets out the PRA's expectations that regulated firms embed climate risk across governance, risk management, scenario analysis, data and disclosure, and assess it through the transmission channels by which climate risk reaches the balance sheet.
SS5/25 updates and replaces SS3/19, the PRA's earlier 2019 supervisory statement on climate-related financial risk. It was published alongside policy statement PS25/25 and reflects several years of supervisory experience, raising expectations from awareness to an embedded, capital-relevant capability.
SS5/25 was published on 3 December 2025 with PS25/25 and took effect immediately, replacing SS3/19. The PRA expects firms to complete a gap review against the updated expectations by 3 June 2026 and to close any gaps. Firms should confirm the current expectations and any transitional detail directly against the PRA's published statement.
It applies to PRA-regulated firms — including UK insurers and reinsurers under Solvency II and, in the Lloyd's market, managing agents — as well as banks. The expectations are proportionate to the nature, scale and complexity of the firm.
Transmission channels are the routes by which climate risk becomes financial risk — for example physical hazards driving underwriting and claims, or transition and policy shifts repricing assets and credit. SS5/25 expects firms to assess climate risk through these channels so it resolves to concrete impacts on the balance sheet rather than remaining abstract.
SS5/25 expects climate risk to be a live input to the ORSA — feeding risk identification, scenario and stress testing, management actions and forward-looking capital assessment. Climate can no longer sit as a separate chapter; its impact on the SCR and own funds is expected to be quantified within the same forward-looking assessment.
Forward-looking physical and transition scenario analysis, used to test the firm's resilience and inform strategy and capital. In practice firms draw on reference pathways such as the NGFS scenarios, adapted to their own exposures, and run them regularly rather than as a one-off exercise.
SS5/25 does not create a separate climate capital charge, but it expects firms to understand and, where material, reflect climate risk in their risk and capital assessment through the ORSA. The practical test is whether the firm can show how climate scenarios move the SCR, technical provisions and own funds.
SS5/25 is a prudential, risk-and-capital expectation, while TCFD, ISSB / IFRS S2 and CSRD are disclosure frameworks. They are complementary: the same integrated climate risk analysis that satisfies SS5/25's risk-management expectations also produces the substance behind climate disclosure, avoiding two disconnected exercises.
Abgalis carries physical and transition climate as live risk domains inside one model wired to your capital position, so climate scenarios feed the ORSA and resolve to SCR and own-funds impact directly. That supports the SS5/25 expectations on risk management, scenario analysis and capital from a running model rather than a periodic project. Accountability for the firm's assessment and submissions remains with its own board and risk and actuarial functions.
This page is a general explainer, not legal, regulatory or actuarial advice. Firms should refer to the PRA's published SS5/25 and PS25/25 and take their own advice. Abgalis is a risk data and analytics provider and is not a regulated or authorised firm.
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