By Pete Schroeder

WASHINGTON, (Reuters) – A U.S. regulator has asked the heads of major banks to assess their climate risk and to manage it. This includes potential exposure to a carbon tax.

Michael Hsu was the Acting Comptroller at the Currency. He stated in Monday’s speech that bank boards should ask their executives to provide detailed information on climate change. The acting Comptroller of the Currency Michael Hsu suggested that bank board members should ask their managers for details on how they plan to address climate change in next year.

Hsu said that his supervisors were developing a framework to guide banks in climate risk management. He expects to release guidance before the end of 2012. JPMorgan Chase, NYSE:) are some of the most important banks that he oversees. Wells Fargo (NYSE) and Bank of America.

“Climate Change poses serious risks for the financial system. Numerous detailed reports were published. It has been said with eloquent words. He said, “It is now that we can put those words into practice.”

Hsu recommended that banks be able determine their climate risk and keep track of it. This includes which areas or counterparties need closer monitoring in their portfolios. Hsu also suggested that banks monitor their potential exposure to carbon taxes. Hsu advised banks to prepare for transition risks that could arise from the shift in policy to low-carbon economies.

Hsu stated that banks need to be alert about how weather changes could affect their physical infrastructures, including data centers.

Banks are increasingly dependent upon third-party vendors to provide critical services. To the extent that critical service providers are vulnerable to climate change, banks’ abilities to continue critical operations may be affected,” he said.