<aside> 📌 Meet our investment in this space: Climate X
Climate hazards will increase in frequency and severity as we are already locked into a certain amount of global warming (how much the world warms, is up to us). The financial impacts of these hazards are vast, so measuring and evaluating climate risk is becoming an essential business practice. To evaluate risk from climate change, we need to look at the full picture: hazards, exposure (physical presence), and vulnerability (the likelihood of harm).
<aside> 💡 Risk = hazards + vulnerability + exposure
Climate risk refers to the interaction of climate-related hazards with the vulnerability and exposure of human and natural systems. So it is a combination of the likelihood of harm, the potential of an event to occur, and physical presence.
The components of risk are driven by both climate and socioeconomic aspects.
Source: IPCC 5th assessment report
<aside> 📌 Hazard: "The potential occurrence of a natural or human-induced physical event or trend or physical impact that may cause loss of life, injury, or other health impacts, as well as damage and loss to property, infrastructure, livelihoods, service provision, ecosystems, and environmental resources." (IPCC)
<aside> 📌 Vulnerability: "The propensity or predisposition to be adversely affected. Vulnerability encompasses a variety of concepts and elements including sensitivity or susceptibility to harm and lack of capacity to cope and adapt." (IPCC)
<aside> 📌 Exposure: "The presence of people, livelihoods, species or ecosystems, environmental functions, services, and resources, infrastructure, or economic, social, or cultural assets in places and settings that could be adversely affected." (IPCC)
Local changes directly related to climate effects
Will increase in frequency and magnitude under a "business as usual scenario"
Can be acute (i.e. extreme weather events) or chronic: