Climate change creates climate-related risks that are incorporated in several different types of risk. Transition risks involve changes in law, policy, technology, and markets related to the transition to a lower-carbon energy supply (Center for Climate and Energy Solutions, 2022 ). Those risks include regulatory risk, such as climate laws and policies that affect how companies operate, and liability risk, such as litigation that targets companies for contributing to climate change and affects a company’s reputation. Physical risks from climate change include damage to fixed assets like buildings and property, or supply chain disruptions. Damage can result from extreme weather events or changes in water availability. The effects of climate change are not all negative. Climate change can also present opportunities, including expanded markets for existing products and services, new markets for new and existing products, and cost reductions.
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