Glossary
Climate and transition
What is physical risk?
Damage and disruption from a changing climate.
Heat, flood, drought and the withdrawal of insurance. Insurers reprice before valuations do, so an uninsurable asset is usually the first honest signal.
A worked example
A ski resort valued on 120 snow days a year finds seasons shrinking to 90. Revenue falls by about a quarter, and the insurer covering its snowmaking kit either raises the premium sharply or stops offering cover.
Where it catches you in the game
- Alpine and infrastructure scenarios price this directly into asset values.
Related terms
Learn it by using it
Definitions stick once they've cost you money. Take a seat, make three calls a year and watch what physical risk does to your returns.