Abstract/Summary

The financial sector’s role is undeniably crucial in modern economies. Yet, this sector more often attract criticisms. Of particular concern is the negligence of proper credit risk management, that may undermine (macro)economic stability. The absence of appropriate policies (industry and institutional) draws attention to firm performance indicators, that remain short-sighted in assessing the provision of sustainable risk management. The sector and in particular Financial Intermediaries (FIs), must confront the complex task of assessing their impacts and actively endorse enabling conditions towards sustainable development. Our paper offers managerial insights from a wide range of Financial Intermediaries (FIs) currently active in Greece. We address the critical question of how do FIs incorporate sustainability in credit risk management. A mixed-methods approach of online questionnaires and semi-structured interviews is utilized to link and investigate managerial perspectives of sustainability risks and their impact on bad loans. The executives’ responses reveal that sustainability risk management indeed exists but has yet to penetrate core processes; it does provide strong motives over new management techniques and contributes to a higher level of materiality of FI’s core operations. Nonetheless, there is still plenty of room for improvement before sustainability risk assessments are comprehensively incorporated in all phases of the credit risk management process, so that a robust approach that encapsulates sustainability considerations is underpinning FI’s core mission and goals.