Climate Risk
Climate risk encompasses the potential negative impacts on an organisation’s operations, finances, and strategy from both the physical effects of climate change and the transition to a low-carbon economy.
What is Climate Risk?
Climate risk is divided into two categories: physical risk (damage from extreme weather, sea level rise, temperature changes) and transition risk (policy changes, technology shifts, market changes, reputational impacts from the low-carbon transition). The TCFD framework, now incorporated into the ISSB standards, requires companies to assess and disclose both types. Climate risk assessment involves scenario analysis — modelling how different warming pathways (1.5°C, 2°C, 4°C) might affect the business.
Practical Examples
A coastal property company assesses physical climate risk using IPCC sea level rise projections, identifying 15 properties at increased flood risk by 2050.
An oil and gas company models transition risk under a 1.5°C scenario, finding that 40% of its reserves may become stranded assets.
How Climatise Helps
Climatise provides the emissions baseline and trajectory data needed for climate risk assessment and scenario analysis, supporting TCFD and ISSB disclosure requirements.
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