Physical Risks

Physical risks refer to potential negative impacts on businesses due to physical changes in the environment that arise from climate change. These risks can be acute or chronic:

• Acute Physical Risks: Short-term, often severe weather events, such as hurricanes, floods, wildfires, or extreme heat waves, that can disrupt operations, damage assets, and interrupt supply chains.
• Chronic Physical Risks: Long-term changes in climate patterns, such as rising temperatures, sea level rise, shifting rainfall patterns, and prolonged droughts, which may gradually impact business operations, increase costs, and affect the stability of supply chains.

Companies assess these risks to better understand potential vulnerabilities and take measures to protect assets, ensure operational continuity, and support resilience across their value chain.