Climate finance

Question 1

In which 3 classes can climate risk be classified?

Answer 1

• Physical risks
• Transition risks
• Liability risks (for insurers)

Question 2

Is the below description a) physical risk, b) transition risk or c) liability risk?

• Mostly negative impact. It affects company performances.
• Acute: extreme weather events - heat waves
• Chronic: increase in temperature (more permanent). Observations will remain for the short term.
• Positive impacts could be related to the agricultural business. Increased temperature gives the opportunity for countries to start new productions that fits the new climate.

Answer 2

a) Physical risk

Question 3

Is the below description a) physical risk, b) transition risk or c) liability risk?

• Both positive and negative impacts. Affect company performances.
• Risk related to policies. Ex. increase in climate taxes or carbon emission regulations.
• Risk related to technological innovation.
• Risk related to change in consumer preferences.

Answer 3

b) Transition risk

Question 4

Mitigation strategy is:

a) Based on reduction of vulnerability against effect of climate change. Adapt activity to the new effects. Increase structure to try to avoid asset disruption as an effect of weather catastrophes. Decrease disruptions.
b) Based on behaviors and activities aim at reducing emission of greenhouse gases to mitigate future climate change. –> Increase low carbon activity, subsidized by the government will increase the possibility of increasing revenues, as well as margins and decreasing risk. Communicate this due to the market: may have a positive effect on pricing and mood in the market. ESG rating can be a measure of this.
c) Both of the above
d) Non of the above

Answer 4

b)

Question 5

Adaption strategy is:

a) Based on reduction of vulnerability against effect of climate change. Adapt activity to the new effects. Increase structure to try to avoid asset disruption as an effect of weather catastrophes. Decrease disruptions.
b) Based on behaviors and activities aim at reducing emission of greenhouse gases to mitigate future climate change. –> Increase low carbon activity, subsidized by the government will increase the possibility of increasing revenues, as well as margins and decreasing risk. Communicate this due to the market: may have a positive effect on pricing and mood in the market. ESG rating can be a measure of this.
c) Both of the above
d) Non of the above

Answer 5

a)