Climate Scenario Analysis Can Help Strengthen Your Company's Climate Resilience

Climate risk refers to the potential financial, social, or environmental harm caused by climate change. Climate risk is broadly defined as the range of potential business and financial impacts that organizations may face resulting from the effects of climate change. These risks are categorized as either physical risks or as transition risks.

Physical risks arise from the increase of extreme climate-related disasters like wildfires, storms, floods and heatwaves and events like droughts, landslides, sea-level rise and precipitation. Transition risks come from trying to slow down the rate of climate change by transitioning from reliance on fossil fuels towards a low-carbon economy. They stem from changing policies, evolving technology and shifting sentiments.