Indonesia is highly vulnerable to the impacts of climate change, including rising sea levels, floods, and droughts. Climate-related events in 2024 alone resulted in an estimated economic loss of IDR 4 trillion (International Monetary Fund (IMF), 2025; Global Climate Risk, 2025). The banking sector is no exception to this phenomenon, potentially triggering asset value depreciation, physical damage, and loss, as well as disruption to community livelihood, which reduces the debtor’s repayment capacity. On the other hand, the conservative approach of risk-aversion within the banking sector could slow credit growth and weaken financial inclusion. In response to these issues, conducting analyses using future projections is imperative, particularly to enhance climate sensitivity within the banking sector. This policy brief proposes three practical steps to build institutional resilience, improve risk assessment, and align with evolving regulatory and global standards. These steps include strengthening internal strategies to address physical climate risks, collaborating with climate data providers to support informed decision-making, and ensuring alignment with climate-related disclosure requirements.