Climate risks

Climate risks arise from significant changes in the Earth's spheres and are a result of changes in the climate and environment caused by humans.

Climate risks are risks that arise from the effects of climate change and encompass both physical and non-physical dimensions. Physical risks stem from direct climatic changes, such as rising temperatures, extreme weather events, or rising sea levels. These can lead to significant damage to infrastructure, disruptions in supply chains, and direct impacts on health or agriculture. In particular, urban areas in Germany are threatened by heatwaves, while rural regions are at risk from flooding.

Transitional risks, on the other hand, arise in the course of the transition to a low-carbon economy. These include political and regulatory risks such as new environmental regulations and carbon pricing, legal risks, as well as market and reputational risks that may arise from changing consumer preferences and accumulated liability issues. Companies are encouraged to systematically identify both types of climate risks and integrate them into their risk management.

The impacts of climate risks are not only economically significant but also affect social stability and security. Constraints on resources, such as water and food, can lead to social tension and conflict. Therefore, considering climate risks in decision-making processes is crucial to developing sustainable and future-proof strategies that meet both ecological and social requirements.