View source for Finance:Climate risk

{{short description|Risk resulting from climate change and affecting natural and human systems and regions}}
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[[File:Risk equation.png|thumb|upright=2.2|The ''risk equation'' shows that climate risk is a product of [[Hazard|hazard]], exposure, and [[Climate change vulnerability|climate change vulnerability]] (where 'x' represents interaction between the components).<ref>Gill, J.C., Duncan, M., Ciurean, R., Smale, L., Stuparu, D., Schlumberger, J, de Ruiter M., Tiggeloven, T., Torresan, S., Gottardo, S., Mysiak, J., Harris, R., Petrescu, E. C., Girard, T., Khazai, B., Claassen, J., Dai, R., Champion, A., Daloz, A. S., … Ward, P. 2022. [https://nora.nerc.ac.uk/id/eprint/533237/1/OR22051.pdf MYRIAD-EU D1.2 Handbook of Multi-hazard, Multi-Risk Definitions and Concepts.] H2020 MYRIAD-EU Project, grant agreement number 101003276, pp 75.</ref> ]]

'''Climate risk''' is the potential for negative consequences for human or ecological systems from the impacts of climate change.<ref name=":3">IPCC, 2022: [https://www.ipcc.ch/report/ar6/wg2/downloads/report/IPCC_AR6_WGII_Annex-II.pdf Annex II: Glossary] [Möller, V., R. van Diemen, J.B.R. Matthews, C. Méndez, S. Semenov, J.S. Fuglestvedt, A. Reisinger (eds.)]. In: [https://www.ipcc.ch/report/sixth-assessment-report-working-group-ii/ Climate Change 2022: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change] [H.-O. Pörtner, D.C. Roberts, M. Tignor, E.S. Poloczanska, K. Mintenbeck, A. Alegría, M. Craig, S. Langsdorf, S. Löschke, V. Möller, A. Okem, B. Rama (eds.)]. Cambridge University Press, Cambridge, UK and New York, NY, USA, pp. 2897–2930, {{doi|10.1017/9781009325844.029.}}</ref> It refers to risk assessments based on formal analysis of the consequences, likelihoods and responses to these impacts and how societal constraints shape [[Earth:Climate change adaptation|adaptation]] options.<ref>{{cite journal | vauthors = Adger WN, Brown I, Surminski S | title = Advances in risk assessment for climate change adaptation policy | journal = Philosophical Transactions. Series A, Mathematical, Physical, and Engineering Sciences | volume = 376 | issue = 2121 | pages = 20180106 | date = June 2018 | pmid = 29712800 | pmc = 5938640 | doi = 10.1098/rsta.2018.0106 | bibcode = 2018RSPTA.37680106A }}</ref><ref>{{cite book | first1 = David | last1 = Eckstein | first2 = Marie-Lena | last2 = Hutfils | first3 = Maik | last3 = Winges | name-list-style = vanc |title=Global Climate Risk Index 2019; Who Suffers Most From Extreme Weather Events? Weather-related Loss Events in 2017 and 1998 to 2017 |date=December 2018 |publisher=Germanwatch e.V. |location=Bonn |isbn=978-3-943704-70-9 |edition=14th|page=35 |url= https://www.germanwatch.org/sites/germanwatch.org/files/Global%20Climate%20Risk%20Index%202019_2.pdf |access-date=7 December 2019}}</ref> However, the science also recognises different values and preferences around risk, and the importance of risk perception.<ref name=":10" />{{rp|149}}

Common approaches to [[Risk assessment|risk assessment]] and [[Risk management|risk management]] strategies based on natural hazards have been applied to climate change impacts although there are distinct differences. Based on a [[Earth:Climate system|climate system]] that is no longer staying within a stationary range of extremes,<ref name=":1">{{Cite book|last=IPCC|title=Global Warming of 1.5°C. An IPCC Special Report. Summary for Policymakers|publisher=Intergovernmental Panel on Climate Change|year=2018|url = https://www.ipcc.ch/site/assets/uploads/sites/2/2019/06/SR15_Full_Report_Low_Res.pdf |pages=5}}</ref> climate change impacts are anticipated to increase for the coming decades.<ref>{{Cite journal|last=Chen|first=Xiang | name-list-style = vanc |date=2011-09-01|title=Why do people misunderstand climate change? Heuristics, mental models and ontological assumptions |journal=Climatic Change|language=en|volume=108|issue=1|pages=31–46|doi=10.1007/s10584-010-0013-5 |bibcode=2011ClCh..108...31C |s2cid=154308472 }}</ref> Ongoing changes in the climate system complicates assessing risks. Applying current knowledge to understand climate risk is further complicated due to substantial differences in regional climate projections. There is also an expanding numbers of climate model results, and the need to select a useful set of future [[Software:Climate change scenario|climate change scenarios]] in the assessments.<ref>{{Cite journal |last1=Whetton |first1=Penny |last2=Hennessy |first2=Kevin |last3=Clarke |first3=John |last4=McInnes |first4=Kathleen |last5=Kent |first5=David | name-list-style = vanc |date=2012-12-01|title=Use of Representative Climate Futures in impact and adaptation assessment |journal=Climatic Change|language=en|volume=115|issue=3|pages=433–442|doi=10.1007/s10584-012-0471-z |bibcode=2012ClCh..115..433W |s2cid=153833090 }}</ref>

The [[Organization:Intergovernmental Panel on Climate Change|Intergovernmental Panel on Climate Change]] (IPCC) assessment framework is based on the understanding that climate risk emerges from the interaction of three risk factors: [[Hazard|hazards]], [[Climate change vulnerability|vulnerability]] and exposure. The IPCC summarises publishes research on climate risk evaluations.<ref name=":4">{{Cite web|title=About — IPCC|url=https://www.ipcc.ch/about/|access-date=2020-11-30}}</ref> International and research communities have been working on various approaches to climate risk management including [[Biology:Climate risk insurance|climate risk insurance]].

== Definitions ==
[[File:Figure 1- Relationships among Risks, Resilience, Hazard Mitigation, and Climate Change Adaptation (27242486244).jpg|thumb|upright=1.8|Diagram explaining the relationships between risk, hazard mitigation, [[Earth:Climate resilience|resilience]], and adaptation]]''Climate risk'' is the potential for negative consequences for human or ecological systems from the impacts of [[Earth:Climate change|climate change]].<ref name=":3" /> Risk is used mainly to talk about the potential effects of climate change, but it may also result from the measures that we take to respond to those changes. The definition also recognises the different values and preferences that people have towards the human or ecological systems at risk. 

[[Risk assessment]] is the qualitative and/or quantitative scientific estimation of risks.<ref name=":3" />

[[Risk perception]] is the personal judgement that people make about the characteristics and severity of a risk.<ref name=":3" />

== Understanding risks ==
Climate risks are increasingly felt in all regions of the world, and they are especially visible in the growing number of disasters that are driven by climatic events.<ref name=":0">O'Neill, B., M. van Aalst, Z. Zaiton Ibrahim, L. Berrang Ford, S. Bhadwal, H. Buhaug, D. Diaz, K. Frieler, M. Garschagen, A. Magnan, G. Midgley, A. Mirzabaev, A. Thomas, and R.Warren, 2022: [https://www.ipcc.ch/report/ar6/wg2/downloads/report/IPCC_AR6_WGII_Chapter16.pdf Chapter 16: Key Risks Across Sectors and Regions]. In: [https://www.ipcc.ch/report/ar6/wg2/ Climate Change 2022: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change] [H.-O. Pörtner, D.C. Roberts, M. Tignor, E.S. Poloczanska, K. Mintenbeck, A. Alegría, M. Craig, S. Langsdorf, S. Löschke, V. Möller, A. Okem, B. Rama (eds.)]. Cambridge University Press, Cambridge, UK and New York, NY, USA, pp. 2411–2538, doi:10.1017/9781009325844.025.</ref> Many of these risks and impacts are expected to increase in future, and therefore are an increasing concern. Risk assessments are based on responses of a [[Earth:Climate system|climate system]] that is no longer staying within a stationary range of extremes.<ref name=":1" /> The [[Organization:Intergovernmental Panel on Climate Change|Intergovernmental Panel on Climate Change]] (IPCC) assessment framework is based on the understanding that climate risk emerges from the interaction of three risk factors: [[Hazard|hazards]], [[Climate change vulnerability|vulnerability]] and exposure.

In this framework, climate risks are also described in five sets of major risks:<ref name=":0" /> {{rp|2417}}

# unique and threatened systems
# [[Earth:Extreme weather|extreme weather]] events
# distribution of impacts
# global aggregate impacts
# large-scale singular events

=== Risks and uncertainties ===
[[Risk|Risks]] and [[Physics:Uncertainty|uncertainties]] are closely related concepts. Risk is “the potential” for a negative outcome, so it implies uncertainty or incomplete information. However, risks are more often understood in a more context-specific way. Each component of climate risk - hazards, exposure and vulnerability -  may be uncertain in terms of the magnitude and likelihood of occurrence. Assessment of the risk includes a set of measured uncertainties. These are usually given in terms of a set or range of possible outcomes, which may also include probabilities. The [[Organization:Intergovernmental Panel on Climate Change|IPCC]] uses qualitative rating scales for uncertainty which may be based on quantitative results or expert judgement.<ref name=":3" />{{rp|2926}} <ref name=":6">Susanne Hanger-Kopp, Alexandros Nikas, and Jenny Lieu, (2019), [https://www.taylorfrancis.com/chapters/oa-edit/10.4324/9780429458781-2/framing-risks-uncertainties-associated-low-carbon-pathways-susanne-hanger-kopp-alexandros-nikas-jenny-lieu "Framing risks and uncertainties associated with low-carbon pathways."] ''Narratives of Low-Carbon Transitions: Understanding Risks and Uncertainties''. 
</ref>{{rp|11-12}}

Uncertainty is also used in a broader way to describe general lack of knowledge about the world and of possible outcomes (epistemic uncertainty). Some such outcomes are inherently unpredictable (aleatory uncertainty). It can also refer to different framings or understandings about the world (ambiguity) including different scientific understandings. There are many types of sources of uncertainty. Unlike risk, uncertainty does not always carry negative connotations. Risk is subcategory of uncertainty that is considered to make potential issues and problems more manageable.<ref name=":6" />{{rp|11-12}}<ref>{{Cite web |last=weADAPT |title=Decision uncertainty |url=https://www.weadapt.org/knowledge-base/adaptation-decision-making/decision-uncertainty |access-date=19 September 2023}}</ref> Risk is a term used widely across different management practice areas. Examples are business, [[Finance:Economics|economics]], [[Environmental science|environment]], [[Finance:Finance|finance]], [[Engineering:Information technology|information technology]], health, [[Finance:Insurance|insurance]], safety, and [[Security|security]].

=== Vulnerability ===
{{Excerpt|Climate vulnerability|paragraphs=1-2|file=no}}

=== Responses to risk ===
[[Earth:Climate change adaptation|Climate change adaptation]] and [[Earth:Climate change mitigation|climate change mitigation]] can reduce climate-related risks. These two types of [[Earth:Climate action|climate action]] can be complementary and can result in synergies, and thus more successful results.<ref name=":10">Ara Begum, R., R. Lempert, E. Ali, T.A. Benjaminsen, T. Bernauer, W. Cramer, X. Cui, K. Mach, G. Nagy, N.C. Stenseth, R. Sukumar, and P. Wester, 2022: [https://www.ipcc.ch/report/ar6/wg2/downloads/report/IPCC_AR6_WGII_Chapter01.pdf Chapter 1: Point of Departure and Key Concepts]. In: [https://www.ipcc.ch/report/ar6/wg2/ Climate Change 2022: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change] [H.-O. Pörtner, D.C. Roberts, M. Tignor, E.S. Poloczanska, K. Mintenbeck, A. Alegría, M. Craig, S. Langsdorf, S. Löschke, V. Möller, A. Okem, B. Rama (eds.)]. Cambridge University Press, Cambridge, UK and New York, NY, USA, pp. 121–196, doi:10.1017/9781009325844.003.</ref>{{rp|128,175}}

{{Excerpt|Climate change adaptation|Reduce risk factors: vulnerability and exposure|paragraphs=1|file=no}}

== By sector ==
Climate risks can be categorised into natural environment, infrastructure, human health, the built environment, business and international.<ref name=":2">Climate Change Committee (2022), [https://www.gov.uk/government/publications/uk-climate-change-risk-assessment-2022 UK Climate Change Risk Assessment 2022], HM Government</ref> The [[Organization:Intergovernmental Panel on Climate Change|IPCC]] [[Earth:IPCC Sixth Assessment Report|Sixth Assessment Report]] considers risks within important sectors affected by climate change, like agriculture, water, cities, ecosystems, health and livelihoods.<ref name=":12">{{cite book |last1=Intergovernmental Panel On Climate Change (Ipcc) |url=https://report.ipcc.ch/ar6/wg2/IPCC_AR6_WGII_FullReport.pdf |title=Climate Change 2022: Impacts, Adaptation and Vulnerability |publisher=[[Organization:Intergovernmental Panel on Climate Change|Intergovernmental Panel on Climate Change]] |year=2023 |isbn=9781009325844 |language=en |doi=10.1017/9781009325844 |access-date= |s2cid=259568239}}</ref>{{rp|ix}} It also considers sets of major risks across these sectors.<ref name=":0" /> {{rp|2417}} Risk categories are often assessed in relation to multiple hazards and impacts, but hazard-specific assessments are often also available, eg. flood risk or heatwave risk assessment.

=== Ecosystems and their services ===
{{See also|Effects of climate change on ecosystems|Effects of climate change on oceans}}The main risks to ecosystems from climate change are biodiversity loss, ecosystem structure change, increased tree mortality, increased wildfire, and ecosystem carbon losses. These risks are linked. Loss of species can increase the risks to ecosystem health.<ref name=":13">Parmesan, C., M.D. Morecroft, Y. Trisurat, R. Adrian, G.Z. Anshari, A. Arneth, Q. Gao, P. Gonzalez, R. Harris, J. Price, N. Stevens, and G.H. Talukdarr, 2022: [https://www.ipcc.ch/report/ar6/wg2/downloads/report/IPCC_AR6_WGII_Chapter02.pdf Terrestrial and Freshwater Ecosystems and Their Services]. In: [https://www.ipcc.ch/report/ar6/wg2/ Climate Change 2022: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change] [H.-O. Pörtner, D.C. Roberts, M. Tignor, E.S. Poloczanska, K. Mintenbeck, A. Alegría, M. Craig, S. Langsdorf, S. Löschke, V. Möller, A. Okem, B. Rama (eds.)]. Cambridge University Press, Cambridge, UK and New York, NY, USA, pp. 197–377, doi:10.1017/9781009325844.004</ref>{{rp|279}} Wildfire is an increasing risk for people as well as to ecosystems in many parts of the world.<ref name=":13" />{{rp|290}} Wildfires and increased pest infestations due to climate change caused much of the recent tree mortality in North America.<ref name=":13" /> {{rp|280}}

Risks to seas and coastal areas include coral bleaching linked with ocean warming. This can change the composition of ecosystems. Coral bleaching and mortality also increase the risks of flooding on nearby shorelines and islands. Ocean acidification attributed to climate change drives change in coral reefs and other ecosystems such as rocky shores and kelp forests.<ref>Cooley, S., D. Schoeman, L. Bopp, P. Boyd, S. Donner, D.Y. Ghebrehiwet, S.-I. Ito, W. Kiessling, P. Martinetto, E. Ojea, M.-F. Racault, B. Rost, and M. Skern-Mauritzen, 2022: [https://www.ipcc.ch/report/ar6/wg2/downloads/report/IPCC_AR6_WGII_Chapter03.pdf Oceans and Coastal Ecosystems and Their Services]. In: [https://www.ipcc.ch/report/ar6/wg2/ Climate Change 2022: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change] [H.-O. Pörtner, D.C. Roberts, M. Tignor, E.S. Poloczanska, K. Mintenbeck, A. Alegría, M. Craig, S. Langsdorf, S. Löschke, V. Möller, A. Okem, B. Rama (eds.)]. Cambridge University Press, Cambridge, UK and New York, NY, USA, pp. 379–550, {{doi|10.1017/9781009325844.005.}}</ref>{{rp|142}}

=== Health ===
{{See also|Effects of climate change on human health}}Climate change-related risks to health include direct risks from extreme weather such as cold waves, storms, or prolonged high temperatures. There are also indirect risks such as mental health impacts of undernutrition or displacement caused by extreme weather.<ref name=":14">Cissé, G., R. McLeman, H. Adams, P. Aldunce, K. Bowen, D. Campbell-Lendrum, S. Clayton, K.L. Ebi, J. Hess, C. Huang, Q. Liu, G. McGregor, J. Semenza, and M.C. Tirado, 2022: [https://www.ipcc.ch/report/ar6/wg2/downloads/report/IPCC_AR6_WGII_Chapter07.pdf Health, Wellbeing, and the Changing Structure of Communities.] In: [https://www.ipcc.ch/report/ar6/wg2/ Climate Change 2022: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change] [H.-O. Pörtner, D.C. Roberts, M. Tignor, E.S. Poloczanska, K. Mintenbeck, A. Alegría, M. Craig, S. Langsdorf, S. Löschke, V. Möller, A. Okem, B. Rama (eds.)]. Cambridge University Press, Cambridge, UK and New York, NY, USA, pp. 1041–1170, {{doi|10.1017/9781009325844.009.}}</ref>{{rp|1076}} Similarly there are mental health risks from loss of access to green spaces, reduced air quality, or from anxiety about climate change.<ref name=":14" />{{rp|1076,1078}} There are further risks from changes in conditions for transmission of infectious diseases. Malaria and dengue are particularly climate-sensitive.<ref name=":14" />{{rp|1062}}

=== Cities ===
{{See also|Climate change and cities|Urban heat island|Heat wave}}Rising temperatures and heatwaves are key risks for cities. With warmer temperatures the [[Earth:Urban heat island|urban heat island]] effect is likely to get worse. Population growth and land use change will influence human health and productivity risks in cities.<ref name=":15">Dodman, D., B. Hayward, M. Pelling, V. Castan Broto, W. Chow, E. Chu, R. Dawson, L. Khirfan, T. McPhearson, A. Prakash, Y. Zheng, and G. Ziervogel, 2022: [https://www.ipcc.ch/report/ar6/wg2/downloads/report/IPCC_AR6_WGII_Chapter06.pdf Chapter 6: Cities, Settlements and Key Infrastructure].  In: [https://www.ipcc.ch/report/ar6/wg2/ Climate Change 2022: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change] [H.-O. Pörtner, D.C. Roberts, M. Tignor, E.S. Poloczanska, K. Mintenbeck, A. Alegría, M. Craig, S. Langsdorf, S. Löschke, V. Möller, A. Okem, B. Rama (eds.)]. Cambridge University Press, Cambridge, UK and New York, NY, USA, pp. 907–1040, {{doi|10.1017/9781009325844.008.}}</ref>{{rp|993}} Urban flooding is another key risk. This is especially the case in coastal settlements where flood risks are exacerbated by sea-level rise and storm surges. A further set of risks arises from reduced water availability. When supply cannot meet demand from expanding settlements, urban residents become exposed to water insecurity and climate impacts. This is especially so during periods of lower rainfall. These key risks differ greatly between cities, and between different groups of people in the same city.<ref name=":15" />{{rp|993}}

=== Infrastructure ===

==== Water ====
{{See also|Water security}}Climate change is affecting the overall and seasonal availability of water across regions. Climate change is projected to increase the variability of rain.  There will be impacts on water quality as well as quantity. Floods can wash pollutants into water bodies and damage water infrastructure. In many places, particularly in the tropics and sub-tropics, there are longer dry spells and droughts, sometimes over consecutive years. These have contributed to drier soil conditions, lower groundwater tables and reduced or changed flows of rivers. There are risks to ecosystems, and across many water-using sectors of the economy.<ref name=":152">Caretta, M.A., A. Mukherji, M. Arfanuzzaman, R.A. Betts, A. Gelfan, Y. Hirabayashi, T.K. Lissner, J. Liu, E. Lopez Gunn, R. Morgan, S. Mwanga, and S. Supratid, 2022: [https://www.ipcc.ch/report/ar6/wg2/downloads/report/IPCC_AR6_WGII_Chapter04.pdf Water]. In: [https://www.ipcc.ch/report/ar6/wg2/ Climate Change 2022: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change] [H.-O. Pörtner, D.C. Roberts, M. Tignor, E.S. Poloczanska, K. Mintenbeck, A. Alegría, M. Craig, S. Langsdorf, S. Löschke, V. Möller, A. Okem, B. Rama (eds.)]. Cambridge University Press, Cambridge, UK and New York, NY, USA, pp. 551–712, {{doi|10.1017/9781009325844.006.}}</ref>{{rp|660}} Agriculture is likely to be affected by changes in water availability, putting food security at risk. Irrigation has often contributed to groundwater depletion and changes in the water cycle. It can sometimes make a drought worse.<ref>Douville, H., K. Raghavan, J. Renwick, R.P. Allan, P.A. Arias, M. Barlow, R. Cerezo-Mota, A. Cherchi, T.Y. Gan, J. Gergis, D.  Jiang, A.  Khan, W.  Pokam Mba, D.  Rosenfeld, J. Tierney, and O.  Zolina, 2021: [https://www.ipcc.ch/report/ar6/wg1/downloads/report/IPCC_AR6_WGI_Chapter08.pdf Water Cycle Changes]. In [https://www.ipcc.ch/report/ar6/wg1/ Climate Change 2021: The Physical Science Basis. Contribution of Working Group I  to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change] [Masson-Delmotte, V., P. Zhai, A. Pirani, S.L. Connors, C. Péan, S. Berger, N. Caud, Y. Chen, L. Goldfarb, M.I. Gomis, M. Huang, K. Leitzell, E. Lonnoy, J.B.R. Matthews, T.K. Maycock, T. Waterfield, O. Yelekçi, R. Yu, and B. Zhou (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA, pp. 1055–1210, {{doi|10.1017/9781009157896.010}}</ref>{{rp|1157}}

=== Livelihoods and communities ===
Climate change affects livelihoods and living conditions in significant ways. These include access to natural resources and ecosystems, land and other assets.  Access to basic infrastructure services such as water and sanitation, electricity, roads, telecommunications is another aspect of vulnerability of communities and livelihoods to climate change.<ref name=":16">Birkmann, J., E. Liwenga, R. Pandey, E. Boyd, R. Djalante, F. Gemenne, W. Leal Filho, P.F. Pinho, L. Stringer, and D. Wrathall, 2022: [https://www.ipcc.ch/report/ar6/wg2/downloads/report/IPCC_AR6_WGII_Chapter08.pdf Poverty, Livelihoods and Sustainable Development]. In: [https://www.ipcc.ch/report/ar6/wg2/ Climate Change 2022: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change] [H.-O. Pörtner, D.C. Roberts, M. Tignor, E.S. Poloczanska, K. Mintenbeck, A. Alegría, M. Craig, S. Langsdorf, S. Löschke, V. Möller, A. Okem, B. Rama (eds.)]. Cambridge University Press, Cambridge, UK and New York, NY, USA, pp. 1171–1274, {{doi|10.1017/9781009325844.010.}}</ref>{{rp|1119}}

The biggest livelihood-related risks stem from losses of agricultural yields, impacts on human health and food security, destruction of homes, and loss of income. There are also risks to fish and livestock that livelihoods depend on.<ref name=":16" /> {{rp|1178}} Some communities and livelihoods also face risks of irreversible losses and challenges to development, as well as more complex disaster risks.<ref name=":16" />{{rp|1214}}

The consequences of climate change are the most severe for the poorest populations. These are disproportionately more exposed to hazards such as temperature extremes and droughts. They usually have fewer resources and assets and less access to funding, support and political influence. There are other forms of disadvantage due to discrimination, gender inequalities and through lack of access to resources This includes people with disabilities or minority groups.<ref name=":16" />{{rp|1251}}

Companies also face financial risks<ref>{{Cite web |last1=Colas |first1=John |last2=Khaykin |first2=Ilya |last3=Pyanet |first3=Alban |name-list-style=vanc |title=Climate Change: Managing a New Financial Risk |url=https://www.oliverwyman.com/content/dam/oliver-wyman/v2/publications/2019/feb/Oliver_Wyman_Climate_Change_Managing_a_New_Financial_Risk1.pdf |work=International Association of Credit Portfolio Managers (IACPM) |publisher=Oliver Wyman}}</ref> as well as [[Social:Reputational risk|reputational risk]]s: Companies publicly criticized for their environmental policies or high emissions might lose customers because of negative reputation.<ref>{{cite web|url=https://www.cisl.cam.ac.uk/resources/publication-pdfs/cisl-climate-wise-transition-risk-framework-report.pdf|title=Transition risk framework: Managing the impacts of the low carbon transition on infrastructure investments | date = 2019 | work = University of Cambridge Institute for Sustainability Leadership (CISL) | publisher = Cambridge University }}</ref>

=== International ===
International climate risks are climate risks that cross national borders. Sometimes the impacts of climate change in one country or region can have further consequences for people in other countries. Risks can spread from one country to a neighbouring country, or from one country to distant regions. Risks can also ''cascade'' and have knock-on effects elsewhere, across multiple borders and sectors. For example, an impact of the floods in Thailand in 2011 was disruption to manufacturing supply chains affecting the automotive sector and electronics industry in Japan, Europe and the USA.<ref name=":0" />{{rp|2441-2444}}<ref name=":5">Adaptation Without Borders (2017), [https://adaptationwithoutborders.org/sites/weadapt.org/files/2017/transboundary_climate_risks_web-2.pdf Transboundary climate risks An overview]</ref>

The different stages in a supply chain, where risks can be transmitted and managed, is an example of a ''risk pathway''. Risk pathways, via which impacts are transmitted, include trade and finance networks, flows of people, resource flows such as water or food, and ecosystem connections.<ref name=":0" />{{rp|2441-2444}}<ref name=":5" />

International risks potentially could affect small trade-dependent countries especially those dependent on food imports. They could also affect richer, developed nations that are relatively less exposed to direct risks from climate change. In addition, there are potential consequences from [[Earth:Climate change adaptation|adaptation responses]] initiated in one country that might transmit or alter risks elsewhere. For example, a decision to pull out of investment in risky markets may increase climate vulnerability for many communities.<ref name=":5" />

== Management ==

=== Climate risk management ===
{{Excerpt|Climate risk management}}

=== Climate risk insurance ===
{{Excerpt|climate risk insurance|paragraphs=1,2|file=no}}

==== Climate Risk Pooling ====
{{excerpt | risk pooling | paragraphs=1}}

=== Disaster risk reduction ===
{{Excerpt|Disaster risk reduction|paragraphs=1|file=no}}

=== Climate change adaptation ===

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| image1 = FrontLines-EGAT 2011 Environment Photo Contest Top Entry (5842818280).jpg
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| footer = Adapting to climate change involves structural, physical, social and institutional approaches such as [[Earth:Mangrove|mangrove]] planting and [[Biology:Habitat conservation|habitat conservation]], building [[Earth:Seawall|seawall]]s to protect against [[Earth:Sea level rise|sea level rise]], [[Biology:Selective breeding|selective breeding]] for [[Biology:Xerophyte|drought-resistant crops]], and building [[Biology:Green roof|green roof]]s to reduce [[Earth:Urban heat island|urban heat island]] effects. 
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{{Excerpt|Climate change adaptation|paragraphs=1}}

== Major national and international risk assessments ==

=== International ===
The [[Organization:Intergovernmental Panel on Climate Change|Intergovernmental Panel on Climate Change]] (IPCC) assessment framework is based on the understanding that climate risk emerges from the interaction of three risk factors: hazards, [[Climate change vulnerability|vulnerability]] and exposure. One of primary roles of the IPCC, which was created by the [[Organization:United Nations Environment Programme|United Nations Environment Programme]] (UNEP) and the [[Organization:World Meteorological Organization|World Meteorological Organization]] (WMO) in 1988, is to evaluate climate risks and explore strategies for their prevention and publish this knowledge each year in a series of comprehensive reports.<ref name=":4" /> The most recent report to consider the widest set of climate risks across nature and human activity was the [[Earth:IPCC Sixth Assessment Report|Sixth Assessment Report]] Working Group II report ''[[Earth:IPCC Sixth Assessment Report#WG2report|Impacts, Adaptation and Vulnerability]]'', published in 2022. The assessed levels of risk generally increased compared to previous reports, whilst the impacts were found to have been on the high end of what had been expected.

=== European Union ===
The European Climate Risk Assessment (EUCRA) will assess current and future climate change impacts and risks relating to the environment, economy and wider society in Europe. The European Commission’s Directorate-General for Climate Action and the [[Organization:European Environment Agency|EEA]] lead the preparation. The EUCRA is expected to be published in Spring 2024.<ref>{{Cite web |title=European Climate Risk Assessment |url=https://climate-adapt.eea.europa.eu/en/eu-adaptation-policy/key-eu-actions/climate_risk_assessment/index_html}}</ref>

=== United States ===
The [[Earth:National Climate Assessment|National Climate Assessment (NCA)]] is a United States government interagency ongoing effort on [[Earth:Climate change|climate change]] science conducted under the auspices of the [[Earth:Global Change Research Act of 1990|Global Change Research Act of 1990]]. The fourth edition 'Volume II: Impacts, Risks, and Adaptation in the United States' was published in 2018.<ref name="NCA4_Vol2_2018">{{cite report |url=https://nca2018.globalchange.gov/ |title=Impacts, Risks, and Adaptation in the United States |date=November 23, 2018 |volume=2 |access-date=November 24, 2018 |series=National Climate Assessment}}</ref>

=== United Kingdom ===
The UK Government is required, under the 2008 Climate Change Act, to publish a Climate Change Risk Assessment every five years. This assessment sets out the risks and opportunities facing the UK from climate change. The third assessment published in 2022 identified 61 risks cutting across multiple sectors. These risks were categorised into natural environment, infrastructure, human health, the built environment, business and international.<ref name=":2" />

=== New Zealand ===
The Climate Change Response (Zero Carbon) Amendment Act (amended 2019) includes the publication of a National Climate Change Risk Assessment, every six years. The First Assessment (2020) grouped risks according to five value domains: human, natural environment, economy, built environment and governance. The assessment details the 10 most urgent risks overall, among them: risks to potable water supplies (availability and quality), risks to buildings due to extreme weather events, and risks to governments from economic costs of lost productivity, disaster relief and other unforeseen expenditures.<ref>Ministry for the Environment. 2020. [https://environment.govt.nz/assets/Publications/Files/national-climate-change-risk-assessment-main-report.pdf National Climate Change Risk Assessment for Aotearoa New Zealand: Main report – Arotakenga Tūraru mō te Huringa Āhuarangi o Āotearoa: Pūrongo whakatōpū]. Wellington: Ministry for the Environment.</ref>
== See also ==
* [[Software:Climate change scenario|Climate change scenario]]
* [[Social:Eco-anxiety|Eco-anxiety]]
* Public opinion on climate change

== References ==
{{reflist|30em}}
[[Category:Insurance]]

{{Sourceattribution|Climate risk}}