Climate risk 

The potential negative impacts of climate change on ecosystems, economies, businesses and society. There are two main categories of climate risk: 

1. Physical risks – posed by extreme weather events or chronic, long-term risks such as rising sea levels or global temperature increases. 

2. Transition risks – potential adverse effects (mainly incurred by businesses) of transitioning from fossil fuels and other carbon-emitting activities to more carbon-neutral approaches. Transition risks often refer to the costs of this transition, although businesses that fail to decarbonise adequately may face other risks, such as reputational damage, loss of market share and regulatory consequences.