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Environment & Climate vocabulary · Environmental Reporting and ESG

Climate risk

Meaning in environment & climate, with examples

/ˈklaɪmət rɪsk/nounCommon term

In environment & climate, climate risk means: The possibility that climate change, or the policies and market changes it brings, will cause financial losses or other harm to a company, investor, community or asset.

In Turkish: iklim riski, iklimle ilgili risk

How it is used

Finance and reporting divide it into physical risks (floods, heat, drought, storms) and transition risks (new regulation, carbon prices, changing demand, new technology). Companies assess, manage and disclose climate-related risks and use scenario analysis to test their strategy.

Example sentences

  1. The board reviews climate risk as part of its annual risk assessment.

  2. Our scenario analysis shows that our main climate risk is a rising carbon price.

Common collocations

  • physical climate risk
  • transition risk
  • climate-related risks
  • assess climate risk
  • scenario analysis
  • disclosureThe act of making information public, especially the data, risks and targets that companies must or choose to report to investors, regulators and the public.
  • ESGShort for environmental, social and governance: the three groups of non-financial factors that investors and lenders use to judge a company's risks, impacts and quality of management.
  • extreme weatherWeather that is much more severe than usual for a place and time of year, such as heatwaves, very heavy rain, floods, droughts and strong storms.
  • carbon pricingPolicies that put a price on greenhouse gas emissions, mainly through carbon taxes or emissions trading systems, so that polluters pay and cleaner options become more attractive.
  • resilienceThe ability of a community, city, business or ecosystem to prepare for, cope with and recover quickly from shocks such as floods, heatwaves or droughts.

More terms: Environmental Reporting and ESG

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