Many estimates and analyses of climate change outcomes have been published, often with diverging results, but it is clear that the economic and social impacts are significant in all of them. Climate risks are also materially reflected in the operations of more and more companies, so in addition to corporate risk management, the financial sector and its supervisory authorities have also formulated a number of recommendations and expectations regarding the assessment of these risks.
The two main climate risk elements are physical and transition risks, which can be assessed appropriately using different methods. Physical risk refers to direct environmental changes and disasters, while transition risk refers to risks caused by the transition to carbon neutrality, for example due to tightening regulations.
By assessing and modelling the physical and transition risks associated with climate change, the impacts of climate change on a sector or company can be identified effectively and comprehensively under different scenarios. Through modelling and analysis, KPMG helps companies and financial institutions identify the key risks and mitigate the potential losses that could arise if the risks materialise.
