Physical risks and transitory risks play a decisive role in the context of climate change. While Physical risks arise from direct climatic influences such as extreme weather events and long-term environmental changes, Transitory Risks and Opportunities arise from economic, regulatory and technological adjustments in the course of sustainable transformation.
Physical risks
Chronic | Acute |
Increasing scarcity of key natural resources | Degradation of nature and loss of natural protection (e.g. due to clearing of vegetation for mining development) can exacerbate the severity of damage caused by extreme weather events such as hurricanes, droughts, floods and storms |
Ecosystem degradation due to actions such as deforestation | Loss of species and degradation of ecosystems (e.g. loss of connectivity between species' ranges, disruption of flyways or marine migration corridors) due to spills or accidental discharges (e.g. oil) that contaminate air, Soil and water bodies by the organization itself or by other stakeholders in the same area |
Acidification of the oceans | Diseases or pests affecting the species or variety of crop on which the organization relies, particularly where there is a lack of or low genetic diversity |
overfishing | Floods, avalanches, drought, heat waves, storms, tornadoes, etc. |
Loss of land due to Desertification and Soil degradation and the associated loss of soil fertility | |
Species loss and degradation due to Soil, water and marine pollution caused by the organization itself or by stakeholders in certain areas |
Transitory Risks
Market risks | Market Technology | Politics & law | Reputation |
Increased costs for raw materials | Switch to lower-emission technologies | Carbon pricing mechanisms | Shift in consumer preferences |
Changing customer behavior | Substitution of existing products and services with lower-emission options | Stricter emissions reporting obligations Regulations for existing products and services | Stigmatization of the sector |
Uncertainty of market signals | Unsuccessful investments in new technologies | Changes to existing policies/new policies to achieve positive nature outcomes and Targets | Increased stakeholder concerns or negative stakeholder feedback |
Shift in customer values or preferences to products (e.g. food, textiles) with lower impacts on nature | Transition to more efficient and cleaner technologies (i.e. with lower impacts on nature) | Stricter (new) legislation (e.g. trade restrictions or taxes) on activities, products and/or services that impact nature, as well as rights, permits and allocations for natural resources designed to reduce pressure on nature or impacts on local communities | Changes in Consumer sentiment towards the organization/brand as a result of poor Brand as a result of poor nature management and/or lack of stewardship activities |
Volatility or increased cost of materials | Lack of access to data or access to poor quality data making nature-based assessments difficult | Increased reporting requirements | |
New monitoring technologies used by regulatory authorities | Exposure to litigation arising directly or indirectly from legal claims |
Transitory Opportunities
Resource efficiency | Products & DL | Market | Resilience |
Utilization of more efficient transport modes | Development and/or expansion of low-emission goods and services | Access to new markets | Participation in renewable energy programs and introduction of energy efficiency measures |
Use of efficient production and distribution processes | Developing solutions for climate adaptation, resilience and insurance Risks | Use of public sector incentives | |
Use of Recycling | Developing new products or services through R&D and innovation | Access to new assets and sites that require insurance protection | |
Transition to more efficient buildings | Ability to diversify business activities | ||
Reduced Water consumption and use | Shift in Consumer preference | ||
Use of lower emission energy sources |
Further topics
This article has been machine translated. In case of errors, please contact [email protected].