Physical and financial risks from more frequent and severe weather events, including damage to assets such as real estate and infrastructure, will almost certainly grow. Many types of business also face significant transition risks related to the revaluation of assets and the reassessment of projected earnings and expenses.
If not appropriately priced and managed, both types of risk have the potential to bring about significant losses for financial institutions and could even threaten the stability of our financial system. Sound risk management starts with sound measurement. Companies need reliable, consistent and comparable ways to measure and state their exposure to climate risks.