Physical Risk

Physical risks from climate change come from direct damage to assets and infrastructure due to acute, fast-acting impacts like extreme weather events (e.g., hurricanes, floods) that cause localized damage, or chronic, slow-acting impacts such as gradual sea-level rise and long-term changes in climate patterns. While acute events can lead to significant damage in the short term, chronic impacts occur slowly and can have widespread, long-lasting consequences. However, for investors, physical risks tend to be less immediately disruptive to markets compared to transition risks, as their effects are often felt over longer time horizons.

See how we measure it in our physical risk data.