The energy-market collapse this spring offered a glimpse into the massive risks sitting inside bank loan portfolios. Around the world, bankers watched in shock as oil prices went negative for the first time in history and once-thriving companies suddenly teetered on the brink.

Fortunately for banks and their shareholders, prices soon staged a partial recovery, staving off a wave of defaults for now. But the episode serves as a wakeup call for another threat that looms on the horizon for the energy sector and, in turn, for banks and investors: climate risk.