Physical risks

Physical risks arising from climate change refer to changes in the frequency and intensity of catastrophic weather events that can cause physical damage to company assets, disruptions in the supply chain, or increased expenses needed to address them. It is essential to address these risks preventively and strategically to protect both companies and the economy and the environment in general.

There is evidence that these risks are increasingly causing global economic losses associated with disasters and extreme weather events. If these risks are not mitigated, financial institutions will record greater losses in their exposures to companies and households they finance (e.g., due to the decline in the value of collateral assets located in areas that will be particularly affected by permanent climate changes associated with global warming). Therefore, it is essential for the financial system to monitor and estimate potential losses and exposures in the event of extreme weather phenomena.