The Australian Prudential Regulation Authority says it is embedding the assessment of climate risk into its ongoing supervisory activities, and it wants the financial services industry to do more to identify risks and develop mitigation strategies.According to an APRA survey conducted last year, Australian banks and life and general insurers ranked climate change as the number one long-term financial risk, ahead of economic downturns and well ahead of cyber security.APRA research has found that banks, general insurers and super funds had a high level of awareness of the issues, while life insurers and private health insurers were the laggards.But APRA is not satisfied that this awareness is being translated into action.In a speech in Singapore last week, APRA executive board member Geoff Summerhayes said: "We expect to see continuous improvement in how entities are preparing for the transition to the low-carbon economy. "We are strongly encouraging entities to adopt the Financial Stability Board's Task Force on Climate-rated Disclosures (TCFD) recommendations around disclosure."This is not something we are mandating and nor do we intend to introduce a specific climate-related prudential standard at this time. However, I have previously noted that the global regulatory community is steadily moving in this direction."APRA adopted a position a couple of years ago that some financial risks are financial in nature and that many of those risks are foreseeable, material and actionable now. Summerhayes said the regulator recognised that achieving a consensus on how best to act was challenging.As a first step, APRA wants companies to adopt the TCFD standard for identifying, assessing, comparing and disclosing climate risks and opportunities."Once these risks and opportunities have been identified, boards and executives are in a position to act to mitigate against risks and take advantage of opportunities, be they developing new products, expanding into untapped markets or investing in green finance opportunities," Summerhayes said.He said APRA also wanted to see closer collaboration within the financial sector to protect the economy from climate risk.