Banks and insurers are jeopardising their futures if they fail to prepare for climate-related risks, the Australian Prudential Regulation Authority (APRA) has warned.

Key points: APRA says climate change is already leaving its mark, and not just ecologically

APRA says climate change is already leaving its mark, and not just ecologically They say societies response to climate change is affecting the global economy

They say societies response to climate change is affecting the global economy Claim Australia's transition to low carbon economy is underway and moving quickly

The stark advice from the industry watchdog was delivered during a speech last night to the Centre for Policy Development in Sydney.

APRA said it had a duty to warn the institutions that it regulates, like banks, superannuation funds and insurers, if it identified a risk that could threaten their stability.

Geoff Summerhayes, an executive board member of APRA, said that included unexpected risks such as cyber crime, technology disruption or climate risk.

He said climate change was already leaving its mark, and not just ecologically.

"The sustainable insurance forums view, which APRA shares, is that climate change — and here's the crucial bit — societies response to it, are starting to affect the global economy," he said.

Mr Summerhayes gave Cyclone Debbie as an example, which devastated parts of north Queensland earlier this year.

At the latest count the insurance bill from that event topped out at $1.6 billion.

"Should extreme weather events become more frequent and intense, as scientists predict, this type of adverse economy impact will become magnified and more common," Mr Summerhayes said.

"Consequently raising awareness about climate risks and the need for resilience is entirely within APRA's regulatory mandate of promoting financial system stability.

"And in the interests of deposit holders, policy holders and superannuation fund members."

It's the challenge of our time: ANZ

Mr Summerhayes said the APRA has established the Climate Change Financial Risk Working Group, which has begun questioning its entities about their preparedness for climate change and its associated risks.

And furthermore, he predicted that disclosure would become a major trend in global regulation.

While one of the drivers behind that will be regulatory action, he said pressure from investors would be the main player.

Mr Summerhayes cited examples from elsewhere in the world, such as France's energy transition law.

That law requires listed companies and institutions to disclose their investment portfolio contribution to the objectives of the Paris Agreement and the national energy transition strategy.

"[And] the UK and business insurance regulators gather data about market practice on sustainability issues," he said.

"At APRA we're planning a survey of regulated entities to gain a better understanding of emerging best practice. As well as an industry wide review of climate related disclosures."

He also said Australia's transition to a low carbon economy was underway and moving quickly.

ANZ's loans and specialised finance managing director, Christina Tonkin, said understanding climate change related risks was important for business.

"ANZ considers that no stone must be left unturned in the pursuit of transitioning Australia and the region to a more sustainable footing," she said.

"It's the challenge of our time and one that government, business, financiers and communities need to make a top priority."