Physical risk (climate)
ESG & GovernanceThe risk of financial loss from the physical effects of climate change, such as floods, heatwaves, cyclones and droughts.
Physical risk is split into acute risk (sudden events) and chronic risk (slow shifts such as rising temperatures and sea levels). It affects assets, supply chains, workers and insurance costs. For India, with its monsoon dependence, long coastline and extreme heat, physical risk is often as material as transition risk, especially for infrastructure, real estate, agriculture and power.
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