Climate change poses significant challenges to the financial system. Well-known risk channels, such as transition risk and physical risk, have become central considerations in economic planning and decision-making. Transition risk focuses on the strategic challenges corporations and governments face in planning for a low-carbon transition, while physical risk examines damages to assets like buildings and infrastructure caused by climate hazards. However, these dimensions alone do not capture the full breadth of risks associated with climate change. Crucially, two additional dimensions of risk remain still underrepresented in practice.
1. Social Risk: The social consequences arising from climate change, or the measures taken to mitigate and adapt to it
2. Nature Risk: The risks to and from natural ecosystems, biodiversity, and the ecosystem services upon which economies and communities depend
This report is part of the LIFE21-GIC-DE-Stress project and was authored by the 1in1000 initiative.
Find out more at life-stress.eu/news.
Disclaimer:
Co-funded by the European Union. Views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union or CINEA. Neither the European Union nor the granting authority can be held responsible for them.
