Physical Risk

From Open Risk Manual

Definition

Physical Risks are typically defined as risks which arise from the physical effects of climate change and environmental degradation. [1]

They can be categorised either as acute - if they arise from climate and weather-related events and an acute destruction of the environment, or chronic - if they arise from progressive shifts in climate and weather patterns or a gradual loss of ecosystem services.

Examples

Issues and Challenges

The definitions of physical risks vary among international organisations, central banks, supervisors, policymakers and researchers

See Also

References

  1. EBA Report: On Management and Supervision of ESG Risks for Credit Instituions and Investment Firms, EBA/REP/2021/18