Chapter 3. Climate change risk Flashcards

1
Q

Climate risk is related to

A

Financial risks linked to climate change

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2
Q

How can physical climate risk be caused?

A

Physical climate risk can be caused by the physical effects and changing weather patterns that result from climate change.

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3
Q

How can transition climate risk be caused?

A

Transition climate risk can be caused by efforts to reduce and eliminate the greenhouse gas emissions that cause it

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4
Q

IPCC stands for

A

Intergovernmental Panel on Climate Change

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5
Q

UNFCCC stands for

A

United Nations Framework Convention on Climate Change

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6
Q

Subtypes of transition climate risk

A

Policy and Legal
Technology
Market
Reputational

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7
Q

TCFD stands for

A

Taskforce on Climate-Related Financial Disclosures

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8
Q

TCFD’s key disclosure parameters

A
  • Metrics and targets.
    The metrics used by the firm in question to assess climate-related risks and opportunities
  • Risk management.
    Processes the firm has in place to manage climate risks.
  • Strategy.
    The Firm’s strategy surrounding climate change
  • Governance.
    The Firm’s Governance structures to address and take responsibility for climate issues, including at the board level.
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9
Q

What are stranded assets?

A

Assets that have “suffered from unanticipated or premature write-downs, devaluations or conversion to liabilities.”

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10
Q

From a physical risk perspective, hazards are subdivided in

A

Acute and Chronic

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11
Q

The chronic climate hazard includes gradual, long-term trends, like…

A
  • Average temperature rise
  • Sea level rise
  • Changing precipitation patterns
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12
Q

The acute climate hazard includes weather-related or weather-exacerbated events whose incidence increases with climate change, such as…

A
  • Storms and hurricanes
  • Droughts
  • Heatwaves
  • Precipitation extremes and floods
  • Wildfires
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13
Q

Which is the TCFD disclosure recommendation on Governance?

A

Disclose the organization’s governance around climate-related risks and opportunities.

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14
Q

Which is the TCFD disclosure recommendation on Strategy?

A

Disclose the actual and potential impacts of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning where such information is material.

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15
Q

Which is the TCFD disclosure recommendation on Risk Management?

A

Disclose how the organization identifies, assesses, and manages climate-related risks.

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16
Q

Which is the TCFD disclosure recommendation on Metrics and Targets?

A

Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.

17
Q

Which are the TCFD supporting recommended disclosures on Governance?

A

a) Describe the board’s oversight of climate-related risks and opportunities.

b) Describe management’s role in assessing and managing climate-related risks and opportunities.

18
Q

Which are the TCFD supporting recommended disclosures on Strategy?

A

a) Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term.

b) Describe the impact of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning.

c) Describe the resilience of the organization’s strategy, considering different climate-related scenarios, including a 2°C or lower scenario.

19
Q

Which are the TCFD supporting recommended disclosures on Risk Management?

A

a) Describe the organization’s processes for identifying and assessing climate-related risks.

b) Describe the organization’s processes for managing climate-related risks.

c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization’s overall risk management.

20
Q

Which are the TCFD supporting recommended disclosures on Metrics and Targets?

A

a) Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process.

b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions and the related risks.

c) Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets.