Conclusion

Physical risks arise from an organization’s exposure and vulnerability to climate-related hazards. If those risks materialize, organizations face damages and loss due to physical damage to assets and/or infrastructure and/or to operational losses due to disruptions in sales, production, order fulfillment, etc.

The catastrophe modeling framework sheds light on the dynamics of climate risks. It illustrates the pathway via which the changing climate causes increases in costs. It also highlights that an organization can mitigate its climate risks by managing exposure and vulnerability through comprehensive climate adaptation strategies.