Physical Risk (Climate)

Physical climate risks are the financial risks from the physical impacts of climate change. Acute risks include extreme weather events — cyclones, floods, heatwaves, droughts, and wildfires. Chronic risks include long-term shifts — sea-level rise, temperature increase, precipitation pattern changes, water stress, and ecosystem degradation. Physical risk assessment maps asset locations against climate projections, quantifies potential financial impacts (property damage, business interruption, supply chain disruption), and informs adaptation strategies.