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Securities services companies need to respond to changing risks and the impacts they could have on operational resilience. Much of the focus has been on identifying risks relating to asset protection, or factors that can have an impact on revenue, such as falling interest rates. With the potential threat of climate change on asset prices, and the risk more broadly of climate change to financial markets, custodians need to rethink risk, both at an operational level and how they support asset owners and asset managers to help mitigate these risks. [ABSTRACT FROM AUTHOR]

Objectives: The issues of environmental protection, including stopping the degrading climate change, are currently a subject of particular interest of the scientific community, policymakers, practitioners, but also all people around the world. Banking institutions, as a giver of capital, play a special role in financing climate protection activities. On the other hand, they are particularly exposed to climate risk, identified with the probability that extreme natural hazards may cause adverse effects, including the loss of people’s lives, their property or other economic assets, which became the main research topic in the article. The main purpose of the paper is climate risk exegesis and to analyze the degree of climate risk inclusion in the bank risk management process in the case of the Polish banking sector. The conducted empirical research verified the research hypothesis stating that the Polish banking sector is becoming more and more oriented towards the climate risk among the bank risk management systems. Material and methods: The following research methods were used in the paper: survey questionnaire method, case study analysis, observation method and synthesis method. The research procedure included two stages of questionnaire research, followed by the analysis and evaluation of the obtained results. Results: It has been shown that the Polish banking sector defines its climate goals and is increasingly sensitive to the climate risk management, including them in its risk management systems. It also assesses exposure to climate risk in terms of physical and transitional risk. Conclusions: The research and results presented in this study are important in building political awareness as well as public, social and economic activities in the field of counteracting climate threats. However, banks’ awareness is very important for financing projects that reduce degrading impact on climate. [ABSTRACT FROM AUTHOR]

This study delved into transition risk by introducing a novel Climate Transition Score to evaluate the climate-related performance of the most capitalized firms in the stock markets of developed countries. Then we classified these firms into green and brown portfolios. Our analysis demonstrates that high-emission or brown firms bear more risk than their green counterparts do, even if they do not consistently outperform them. To gauge exposure to transition risk, we employed asset pricing factor models such as CAPM, Fama and French 3-Factor, and Carhart's (1997) model. However, these models failed to provide a satisfactory explanation for portfolios' excess returns in their standard formulation. To address this gap, we introduced the Green Minus Brown risk factor. This addition enhanced the explanatory power of the models, emphasizing the heightened exposure of brown companies to transition risk. [ABSTRACT FROM AUTHOR]

In this study, we examine the peer effect on climate risk information disclosure by analyzing A-share listed companies in China. We find that industry peers influence target firms’ climate risk information disclosure through active (passive) imitation resulting from cost–benefit considerations (institutional pressures). Leader companies are more likely to be emulated by within-industry follower companies and target firms prefer to learn from similar within-industry firms. Executive overconfidence and performance pressure negatively affect target firms’ willingness to emulate their peers. Finally, the peer effect of climate risk information disclosure demonstrates a regional aspect. Our findings have implications for reasonable climate risk information disclosure at the micro level and effective regulation to move toward achieving carbon peak/neutrality at the macro level.

Summary: Lenders are likely to face significant financial risks from the shift to a low-carbon economy, but it remains unclear whether such risks are incorporated into their lending practices. The extent of this risk depends on whether banks incorporate such risks into their lending activity and whether financial instruments’ tenors are long enough to cover the period when such risks materialize. Using a case study of shipping loans, we combine quantitative data and semi-structured interviews with key shipping debt providers. Our results show that banks, in particular signatories of the Poseidon Principles, a voluntary disclosure initiative in shipping, have started to price in the climate score of shipowners they lend to after the Paris Agreement but on a corporate rather than an asset basis. However, signatories do not differentiate their margins based on a ship’s carbon intensity, despite a relatively long loan maturity, reinforcing the limitations of disclosure initiatives to influence investment outlays. Science for society: This study explores how the climate performance of a borrower and of an asset financed affects the cost of debt by using a case study of shipping loans. The study highlights that although some banks reward companies with high climate scores, they do not distinguish loan terms based on individual ships’ carbon intensity. Furthermore, despite initiatives like the Poseidon Principles, by which lenders disclose the carbon intensity of their shipping portfolio, the expected reduction in financing costs for greener ships has not been observed. The findings suggest that strengthening disclosure initiatives and implementing regulatory measures could better align the financial sector with climate goals. Public financial bodies can also play a crucial role by providing direct support for cleaner assets. By addressing these issues, the study offers pathways to enhance the financial sector’s role in achieving decarbonization, ultimately contributing to global efforts to mitigate climate change.

The analysis of herding households’ agricultural insurance purchasing behavior under climate risk can help improve the agricultural insurance system in pastoral areas in China.By constructing an analytical framework of “climate change, risk perception, and herding households’ agricultural insurance purchase decisions,” this study matched the survey data from 764 herding households across different types of grasslands in Inner Mongolia with meteorological data from 2019 to 2023. Based on Probit model regression and mediation effect tests, the following conclusions were drawn: Firstly, climate change, especially abnormal fluctuations in precipitation, triggers yield losses and induces loss aversion among herding households, which translates into agricultural insurance purchasing behavior. Secondly, as herding households are divided into production herding households and subsistence herding households, the impact of climate risk on production herding households’ agricultural insurance purchase decisions is more pronounced than that of subsistence herding households. Thirdly, from the perspective of the mechanism of climate change on the agricultural insurance purchasing behavior of production-oriented herding households, climate risk mainly influences herding households’ agricultural insurance purchase through their risk perception. Therefore, with the intensification of global climate change, while further stimulating the agricultural insurance purchasing demand of living herding households through differentiated premium subsidy policies in the future, it is necessary to further enhance the risk perception level of herding households by strengthening the construction of weather forecasting and agricultural and livestock risk data sharing platform, so as to transform the external changes in climate risk into the intrinsic motivation of herding households’ agricultural insurance purchasing behaviors, and to enhance the herding households’ Climate risk coping capacity of herdsmen.

Climate risk refers to the risks associated with climate change and has already started to impact various sectors of the economy. In this work, we focus on the impact of physical risk on the probability of default for a firm in the agribusiness sector. The probability of default is estimated based on the Merton model, where the firm defaults when its asset value falls below the threshold defined by its liabilities. We study the relationship between the stock value of the firm and global surface temperature anomalies, observing that an increase in temperature negatively affects the stock value and, consequently, the asset value of the firm. A decrease in the asset value of the firm translates into an increase in its probability of default. We also propose a model to assess the exposure of the firm to transition risk.

We study the relationship between climate change social norms (CCSN) and corporate cash holdings for U.S. firms. We find that county-level CCSN is significantly positively associated with cash holdings. Our main finding is robust to a battery of robustness tests. In a subsample analysis, we find that firms have relatively low cash holdings in low CCSN counties even when faced with high climate risk. For such firms, the lack of cash buffer could be harmful to a broader set of stakeholders faced with heightened climate risk. We also show that cash holdings are a potential mechanism through which CCSN influences future environmental corporate social responsibility (CSR) performance. Overall, our study suggests that county-level CCSN has significant implications for corporate cash holdings. [ABSTRACT FROM AUTHOR]

Crop farmers in arid and semi-arid regions face a covariate risk that is of paramount importance, namely, the threat of catastrophic crop loss triggered by natural disasters and climate hazards. Such an occurrence not only jeopardizes the livelihoods of these farmers but may also lead to persistent poverty. Promoting sustainable development requires control over climate-related shocks, which negatively affect the most vulnerable population in the developing world. This study investigates the option of choosing crop area-yield index insurance to mitigate the adverse effects associated with climate stress. In addition, we assessed the amount farmers are willing to pay for an insurance product that insures yields below 70% of the local average in the study area. Our results show that access to extension services and economic association membership offers farmers social capital and encourages their decision to purchase index insurance. We also find that the long-run welfare impact of index insurance policy on vulnerable households could be significant as an alternative insurance mechanism to traditional insurance. This study contributes to filling the gaps on the uptake of index insurance and provide guidance to policymakers in their approach to mitigating the effects of climate change on crop production in Nigeria. [ABSTRACT FROM AUTHOR]

Currently, more than half of the world's human population lives in urban areas, which are increasingly affected by climate hazards. Little is known about how multi-hazard environments affect people, especially those living in urban areas in northern latitudes. This study surveyed homeowners in Anchorage and Fairbanks, USA, Alaska's largest urban centers, to measure individual risk perceptions, mitigation response, and damages related to wildfire, surface ice hazards, and permafrost thaw. Up to one third of residents reported being affected by all three hazards, with surface ice hazards being the most widely distributed, related to an estimated $25 million in annual damages. Behavioral risk response, policy recommendations for rapidly changing urban environments, and the challenges to local governments in mitigation efforts are discussed. [ABSTRACT FROM AUTHOR]

• Climate risk has a detrimental impact on the ESG performance of Chinese firms. • The negative effect of CRI on firms' ESG is most pronounced for state-owned firms, growing and declining firms, and firms with higher institutional investor shareholders. • Financing constraints, corporate diversification and media attention have enhanced the negative effect of CRI on ESG. • Firms and relevant capital market regulators should pay particular attention to the impact of climate risks on the ESG performance of firms, particularly in years when climate risks are more severe. Owing to its devastating nature, climate risk has become one of the top concerns of the world community. The literature on the effects of climate risk on environmental, social, and governance (ESG) performance is scarce. Using data from Chinese A-share listed firms from 2010 to 2019, this study aims to determine whether climate risk affects firms' ESG performance. The findings show that climate risk has a detrimental effect on the ESG performance of Chinese firms. A heterogeneity analysis shows that the negative effect of climate risk on firms' ESG performance is most pronounced for state-owned firms, growing and declining firms, and firms with more institutional investor shareholders. Furthermore, a mechanistic analysis shows that financing constraints, corporate diversification, and media attention enhance the negative effect of climate risk on ESG. In addition, after addressing several robustness checks and endogeneity issues, our conclusions remain valid. Thus, this study indicates the need to develop a comprehensive policy to achieve development goals by considering and valuing the impact of climate risk on firm's ESG performance. [ABSTRACT FROM AUTHOR]

In this article, we study the transition risk spillover among six major financial markets from 2013 to 2021. The USA is the main transition risk contributor, while Japan and China are the net risk receivers. Risk spillover may change over time and change according to different types of transition risk shocks. It takes around 6 weeks for transition risks to be fairly transmitted. On average, around 50% of local climate shocks to a given financial market originate from other markets. Transmission channels include the transmission of information and the economic connections between countries. [ABSTRACT FROM AUTHOR]

To explore whether climate risk (CR) affects renewable energy technological innovation (RETI) and its boundary conditions, this study examines the relationship between CR and RETI as moderated by institutional environment. Based on panel data of 60 countries for the period 2000–2019, we show that CR is not conducive to RETI, and that its negative marginal impact shows an inverted U‐shaped trend with the improvement of RETI. Heterogeneity analysis shows that floods and storms have the greatest negative impacts on RETI, and that innovations in solar and wind energy technologies are more vulnerable to the adverse shocks of CR. Furthermore, CR has a greater adverse effect on RETI in developing countries than in developed countries. However, the institutional environment, especially the economic institutional environment, can work to mitigate the negative effect of CR on RETI. Our findings not only enrich the research on the economic consequences of CR but also provide effective ways to mitigate the adverse impact of CR on RETI from the perspective of institutional environment. [ABSTRACT FROM AUTHOR]

The Audit Office of the Republic of Cyprus conducted the first-ever audit of the country's public debt, seeking answers to two key questions. Is government debt sustainable, and is debt financing efficient and effective in securing the lowest cost with acceptable risks? The audit's findings were discussed by the parliament and can have significant ramifications for public finance. However, public debt management is quite complex, and the International Organization of Supreme Audit Institutions suggests that sufficient technical knowledge is essential in undertaking an audit, including an understanding of the uncertain macroeconomy, financing conditions, and government fiscal stance. We use a risk management model based on scenario trees in conducting the audit. The model determines optimal debt financing strategies to benchmark the performance of the country's Public Debt Management Office and answer the audit questions. We also incorporate an integrated assessment model to examine the risks from climate change. The auditor general presented the findings to the Parliamentary Audit Committee in the presence of the Minister of Finance, and his recommendations are expected to have a significant impact on the debt operations of the country. [ABSTRACT FROM AUTHOR]

This article studies the relationship between renewable energy stocks' performance and climate risk. It shows that publicly held renewable energy stocks underperform as a reaction to climate policy information releases, modeled by feed-in tariff (FIT) legislation announcements. The study examined stock price behaviors 2 days before and 30 days after FIT policy announcements. The stock sample used in the study has 3702 firm-day combinations, which included 180 cleantech firms and 32 events from 2007 to 2017. Based on the residual analysis of the sample's abnormal return, it indicated that the FIT announcements are associated with significant declines in returns. The cumulative abnormal return until Day 18 was a significant −0.83%, while the average abnormal return on the day was −0.16% at normal levels. The study partially excluded the likelihood of a transitory result by varying the measurement horizon. It also adopted both the market model and the Fama–French three-factor models to rule out model misspecification when estimating abnormal returns and thus increased the robustness. In fact, the results were stable to changes in estimating the model's specifications. In addition, the study compared the portfolio's performance with mimicking portfolios in terms of size, book-to-market equity (BE/ME), and the firms' geographic location. It demonstrated that the documented anomaly of the portfolio of renewable energy companies is robust. [ABSTRACT FROM AUTHOR]

The physical climate storyline (PCS) approach is increasingly recognized by the physical climate research community as a tool to produce and communicate decision-relevant climate risk information. While PCS is generally understood as a single concept, different varieties of the approach are applied according to the aims and purposes of the PCS and the scientists that build them. To unpack this diversity of detail, this article gives an overview of key practices and assumptions of the PCS approach as developed by physical climate scientists, as well as their ties to similar approaches developed by the broader climate risk and adaptation research community. We first examine varieties of PCSs according to the length of the causal chain they explore, and the type of evidence used. We then describe how they incorporate counterfactual elements and the temporal perspective. Finally, we examine how value judgments are implicitly or explicitly included in the aims and construction of PCSs. We conclude the discussion by suggesting that the PCS approach can further mature in the way it incorporates the narrative element, in the way it incorporates value judgments, and in the way that the evidence chosen to build PCSs constrains what is considered plausible. [ABSTRACT FROM AUTHOR]

Climate change is already having a negative impact on many areas of human activity, affecting life globally. It is more urgent than ever to increase our adaptive capacity to respond to current and future climate change risks. Climate services refer to a specialized sector that encompasses both research and operational activities. This sector is primarily focused on interpreting and communicating knowledge and information about climate risks in a manner that is tailored to meet the specific needs of diverse user communities. Climate services offer a range of specialized outputs, including forecasts, assessments, and advisories, which enable users to make decisions that are based on an understanding of the potential impacts of climate change. The outputs of climate services are designed to help diverse user communities effectively manage risks and capitalize on opportunities arising from climate variability and change. An attempt is made to outline the fundamental elements of climate services and point out their contribution to various aspects of human activity, focusing on their essential role in the adaptability of the priority for action agricultural sector, which appears as considerably vulnerable to the change of considerably susceptible to climate conditions. This article is structured to answer basic questions about climate services in general and to show the specificities of climate services in the agricultural sector. [ABSTRACT FROM AUTHOR]

In recent years, episodes of reduced water availability have occurred in the supplying basins of the city of Santa Marta, leading to a scarcity of water resources. This study delves into understanding the sensitivity of water supply to the macro-climatic phenomena of ENSO (El Niño-Southern Oscillation) and QBO (Quasi-Biennial Oscillation). To assess their influence, teleconnections were established through correlational analysis between hydro climatological series and macroclimatic indices, with statistical significance evaluated using the Student's t-test. The obtained results indicate that the ENSO phenomenon has a statistically significant impact on the hydro-meteorological regime of the area. During the warm phase of the event, there is an increase in average temperatures and a decrease in water availability in the Manzanares and Piedras river basins. Conversely, the Gaira River basin experiences increased water availability due to the melting of the glaciers in the Sierra Nevada de Santa Marta caused by rising temperatures, resulting in an increase in runoff. Given the proximity of the study area to the Pacific Ocean, where the ENSO phenomenon originates, the macro-climatic signal manifests on the hydroclimatic regime during the same month. On the other hand, the analysis of teleconnections between hydro-meteorological variables and the Quasi-Biennial Oscillation event revealed that there is no statistically significant relationship between these variables. This indicates that the water regime is not dependent on this macro-climatic phenomenon. In conclusion, the water regime in the supplying basins of the city of Santa Marta is influenced by ENSO to a degree of 17 to 33%, and the lack of hydrological monitoring in one of the basins makes the city's water supply system vulnerable. Therefore, it is proposed to conduct a study for instrumenting the basins to establish an efficient monitoring system for proper water resource management and city water supply. [ABSTRACT FROM AUTHOR]

We develop the first climate risk Stress Test for the Peruvian financial system following a topdown approach. Focusing on the microeconomic channel, we evaluate how heavy rainfall and droughts, under a scenario of pure physical risk, will marginally affect the probability of default (PD) of borrowers by 2050. Using information from the Credit Registry, the National Oceanic and Atmospheric Administration (NOAA), and CMIP6 precipitation projections (37 modeling groups), we calibrate the marginal impacts differentiating by economic sector and geographical location. We find that, on average, by December 2050, the probability of default of the Peruvian financial system would increase by 4.9% with respect to December 2020. By geographic area, borrowers located on the northern coast (Piura, Lambayeque) and the southern highlands (Ayacucho, Cusco) would be negatively affected by heavy rainfall, while the rainforest (Madre de Dios, Ucayali) would be negatively affected by droughts. Moreover, the economic sectors affected by heavy rainfall or droughts would be agriculture, commerce, and transportation & communications. [ABSTRACT FROM AUTHOR]

As the U.S. Securities and Exchange Commission (SEC) implements rules to improve and standardize climate-related disclosures among public companies and the climate change dilemma unfolds, understanding the economic implications of climate risk disclosures becomes crucial for stakeholders. This study aims to synthesize research developments in the climate risk disclosure domain to provide valuable insights into current research trends and identify potential avenues for future research. More specifically, this study identifies prior research that investigates the economic or financial effects of climate disclosures. Prior studies find both positive and negative effects of climate risk and suggest that climate disclosures may mitigate the effects of climate risk. Our review synthesizes the results of prior studies and identifies the prevailing theoretical frameworks used. Based on our assessment of the findings in prior studies, we also reveal emerging research trends and suggestions for future research. Data Availability: The data used in this research are publicly available and can be made available upon request. JEL Classifications: Q54; M41; G32; G38; Q58. [ABSTRACT FROM AUTHOR]

We find that firms located in US counties with higher sea level rise (SLR) risk engage less in future‐oriented activities, that is, lower corporate social responsibility performance, lower R&D investment and fewer patents granted than firms in counties with lower SLR risk. The effect is strengthened when media attention on climate change is high, when the firm has a high level of prior long‐term investment and when the firm is managed by a young CEO and a CEO who has a greater tendency to avoid uncertainty, whereas it is weakened when the firm's CEO is near retirement and when the firm is geographically diversified. Overall, we document a negative relationship between flood risk exposure and corporate future orientation, suggesting that firms change their future‐oriented attitude in response to concern over climate risks. [ABSTRACT FROM AUTHOR]

In recent years, risk has been increasingly a long-term environmental problem that cannot be underestimated due to its tremendous impacts on various sectors including banking sector. Accordingly, the credit supply to private and public sectors is affected by the increased climate risk. In order to examine the climate risk effect from an international comparison, this paper empirically investigates the impact of climate risk on credit supply by using a sample of 174 countries during 2000–2019 from the perspective of the difference between private and public sectors. The results show that climate risk has a significant negative effect on the credit supply to private sector and a positive effect on that to the public sector. Further, we provide new evidence that the climate risk effect has a more significant effect on the private and public sector credit supply in the high-income countries than that in the low-income countries, suggesting a quick risk contagion in the high-income countries. [ABSTRACT FROM AUTHOR]

Abstract Global climate change is often thought of as a steady and approximately predictable physical response to increasing forcings, which then requires commensurate adaptation. But adaptation has practical, cultural and biological limits, and climate change may pose unanticipated global hazards, sudden changes or other surprises–as may societal adaptation and mitigation responses. These poorly known factors could substantially affect the urgency of mitigation as well as adaptation decisions. We outline a strategy for better accommodating these challenges by making climate science more integrative, in order to identify and quantify known and novel physical risks including those arising from interactions with ecosystems and society. We need to do this even–or especially–when they are highly uncertain, and to explore risks and opportunities associated with mitigation and adaptation responses by engaging across disciplines. We argue that upcoming climate assessments need to be more risk‐aware, and suggest ways of achieving this. These strategies improve the chances of anticipating potential surprises and identifying and communicating “safe landing” pathways that meet UN Sustainable Development Goals and guide humanity toward a better future.

Extreme climate events have become more frequent and have had serious impacts on the global community. Consequently, the risk associated with climate change has gained increasing attention and has been considered as a new source of risk factors. To understand the socio-economic impacts of this new risk, systematically measuring risk around the world is critical for researchers and policymakers. Building on daily observations from meteorological stations, a Climate Physical Risk Index (CPRI) dataset is constructed for 170 countries, paying special attention to four extreme climate events: extreme low temperature (LTD), extreme high temperature (HTD), extreme rainfall (ERD), and extreme drought (EDD). A comprehensive index of climate physical risk for each country has also been constructed, covering the period from 1993 to 2023. The dataset will be updated regularly. Subnational indices or more detailed regional indices are available upon request.

Abstract A large stretch of the east coast of Australia experienced unprecedented rainfall and flooding over a two‐week period in early 2022. It is difficult to reliably estimate the likelihood of such a rare event from the relatively short observational record, so an alternative is to use data from an ensemble prediction system (e.g., a seasonal or decadal forecast system) to obtain a much larger sample of simulated weather events. This so‐called ‘UNSEEN’ method has been successfully applied in several scientific studies, but those studies typically rely on a single prediction system. In this study, we use data from the Decadal Climate Prediction Project to explore the model uncertainty associated with the UNSEEN method by assessing 10 different hindcast ensembles. Using the 15‐day rainfall total averaged over the river catchments impacted by the 2022 east coast event, we find that the models produce a wide range of likelihood estimates. Even after excluding a number of models that fail basic fidelity tests, estimates of the event return period ranged from 320 to 1814 years. The vast majority of models suggested the event is rarer than a standard extreme value assessment of the observational record (297 years). Such large model uncertainty suggests that multi‐model analysis should become part of the standard UNSEEN procedure.

In recent years, the climate services market has increased significantly, especially in the Western European countries where they have become widely utilised in both the public and private sectors. In Romania, there is no specialised platform for those kinds of services, and the sector is in its beginnings. The current study is based on sociological research conducted as part of a national project aimed at increasing adaptive capacity to climate change. The purpose of the questionnaire that served as the study’s base was to collect information about the extent to which climate services are used by organisations, their perception of the benefits of using the services, the technical characteristics of the services, and the future needs of stakeholders. Such an analysis is necessary to comprehend the existing market situation in Romania and to be able to establish the circumstances essential for an effective improvement of climate services and products based on the co-development concept. The main outcomes of the survey conducted at the national level (324 respondents) confirm the early stage of the national climate service market as (i) only a small share (34 %) of respondents are users of climate products and services (mostly from agriculture, forestry, water resources management, biodiversity, energy sectors) and (ii) climate data and products are insufficiently tailored at sectoral level. Most representative identified stakeholder needs refer to: temporal (i.e., monthly, seasonal) and spatial resolution (i.e., local, regional) and types of tailored climate products (i.e., monthly/seasonal weather forecasts, spatio-temporal maps and analysis tool). The study identified premises further development of the climate service market in Romania (i.e., widespread interest in using climate products and services among the non-users, perceived societal benefits of climate products and services).

Faced with the impact of climate risks, what responses do local governments make, particularly in the domain of social public policy? This study uses provincial panel data from China from 2009 to 2020 to investigate how climate risks affect local government education expenditure and its mechanisms. Analysis using spatial econometric models reveals the following. First, local climate risks significantly increase government education expenditure. This conclusion remains consistent across different proxy variables, model specifications, and estimation methods. Additionally, there is a spatial dependency on local government education expenditure, meaning that educational spending in neighboring areas positively influences the education expenditure of a specific location. Second, further mechanism analysis shows that climate risks lead to credit easing and drive the digital economic transformation of a location, thereby increasing its education expenditure. Third, considering the heterogeneity in the spatial dimension, it is found that this positive impetus exists only in the economically more developed eastern region. This study provides insights into understanding how the Chinese government responds to the impact of climate risks and its fiscal policy choices.

UK city decision makers in local governments are coming under increasing pressure to plan for extreme heat events due to the increasing frequency and intensity of such events. While these local authorities are aware of the potential impacts of climate change, many highlight the need for more robust evidence of local climate risks to inform climate planning. Characterising the current and future spatial variability of heat risks can help city decision makers identify vulnerable populations, inform planning, and prioritise action. This paper explores the co-development of a prototype urban heat climate service for UK cities with stakeholders in the pilot city of Belfast, Northern Ireland. This two-tier service uses the latest high-resolution UK Climate Projections to assess changes in impact relevant heat indicators summarised in a bespoke set of factsheets for building awareness (Tier 1). Tier 2 combines this information with socio-economic and built environment data to provide geospatial, decision-relevant, heat risk information at the sub-city scale using a Heat Vulnerability Index (HVI) and communicated using StoryMaps. This work highlights the importance of considering the different components of risk (hazard, sensitivity and adaptive capacity) when planning interventions for extreme heat to ensure local vulnerabilities are adequately addressed. It also highlights the minimum level of heat risk to which we are now committed locally under current emission pledges. This work also explores the lessons learnt in co-production, the impact this service has had on local decision making and explores options for upscaling.

Abstract Background As natural disasters increase in both frequency and magnitude because of climate change, assets, such as buildings and infrastructure, are exposed to physical climate risk. In addition, as our societies transition towards a greener economy, the transitional climate risk will manifest itself in different forms: reputational issues, market solutions that may drive out those that do not comply, technological disruptions and policy initiatives. How both risks, physical and transitional, impact the economic value of real estate assets is not well understood and will be investigated as the main scope of this systematic map. Method we use systematic mapping to collate and configure existing evidence on how climate risk has affected the economic value of real estate assets. After designing a search string, English language peer-reviewed publications will be retrieved from the two largest and most popular scientific research databases, as well as a database containing policy documents. This corpus will be tested for comprehensiveness using a benchmark of 50 highly relevant articles. Once the comprehensiveness test is passed, a consistency test will be carried out on the screening of a randomly selected list of 200 articles by three reviewers. If a kappa score of at least 0.6 is achieved, one of the reviewers will carry out the remainder of the screening, with another reviewer quality assuring 10% of the screening. The retained corpus will then be distributed over the three reviewers, who will carry out the extraction of metadata according to an agreed coding strategy. The final output of the coding will consist of a heat map, showcasing where substantial evidence is available, and research gaps, providing recommendations for further research. In addition, the results will provide insight into the methodology to quantify the impact of climate risk on real estate value. Figures and tables will be designed to make it easy to comprehend the results of the mapping.

The European shallow lakes used primarily for tourism are subjected to a large amount of environmental pressure, and climate change is adding new problems and aspects to them: a complex analysis of processes and connections is necessary to make appropriate decisions and strategies. In this reseach research, using literature review and precedent analysis, it has been reviewed the climate risk of a Central European lake, as well as the natural conditions and landscape change processes determining its sensitivity. It was analysed the ecological and economic effects of the record low water levels of 2021-22, focusing on processes. It was determined which of the current land uses can be considered risky or sensitive in terms of climate change. It was found that natural processes are uniformly leading towards pre-regulation character, low water levels facilitating the regeneration of flora and fauna. However, the dominant land use is dependent on artificially elevated water levels, and therefore serious economic problems have arisen. Beaches, bathing, and angling tourism are the most vulnerable to climate change.

Climate change is among the top global risks due to its growing adverse impact on businesses. However, few empirical studies address this imminent risk from a supply chain perspective. Due to a lack of established approaches for capturing complex interaction between climate change risk and supply chain performance, a three-phase mixed methodology approach was attempted. A cognitive map first captured the inter-relationships based on a mental model established by a group of experts. Later, a survey gathered from industry practitioners assessing causal relationships identified key climate change factors and most influenced supply chain performance dimensions. Finally, a system dynamics model supported by multiple case scenarios assessed the implications of climate change on supply chain performance. The results indicated a significant reduction in the availability of natural resources/raw material and capacity, leading to increase in stock-outs, inventory costs and bottlenecks disrupting procurement, manufacturing and logistics functions. Supply chain performance captured through efficiency and effectiveness shows a negative trend with increasing climate change consequences. The systems approach followed in this paper contributes by providing a quantitative model for assessing the impact of climate change risk on supply chain performance. [ABSTRACT FROM AUTHOR]

This paper examines the integration of climate risks into structural credit risk models. We focus on applications in housing finance and argue that mortgage defaults due to climate disasters have different statistical features than default due to household-specific reasons. We propose two models incorporating climate risk based on two separate default definitions. The first focuses on default as a response to a decrease in home value, and the second defines default as a consequence of missed mortgage payments. Using mortgage performance data during Hurricane Harvey, we conduct an empirical study whose results suggest that climate events are potentially another source of undiversifiable credit risk affecting homeowners’ ability to make contractual monthly payments. We also show that incorporating this climate-specific default process may capture additional uncertainty in default probability assessments.

Climate change is increasingly being coupled to extreme weather and climate events, with an observed increase in intensity and occurrence of climate-related events. Norway is no exception. Though generally considered quite resilient to climate risk, with favorable conditions for adapting on a national level, studies point to regional and local differences. Applying a mixed methods approach we combine a literature review on climate adaptation in Norwegian municipalities showing patterns and trends, with a small-N case study allowing for an in-depth exploration of four Arctic municipalities, where warming occurs faster. We investigate how Norwegian municipalities observe, identify, and prepare for climate-related hazards, by applying the anticipation stage of resilience as an analytical approach. Findings demonstrate how municipal anticipatory capabilities largely rely on external expertise to gather information and/or reduce uncertainty. Experience and familiar hazards form the basis for preparing for future risk. This leaves municipalities running the risk of adapting to present risks while neglecting future developments in vulnerability and exposure to weather and climate events. Climate adaptation has been embedded in the existing processes for risk management, applying statutory risk- and vulnerability assessments as the primary tool for identifying climate risk. We find that this framing leaves a significant imprint on the municipal adaptation efforts. Based on our findings we recommend that municipalities look to strengthen in-house competency on climate adaptation and implement the use of distinct climate risk assessments to better capture long-term risk and identify local adaptation needs and measures.

Disaster or catastrophe risk pooling refers to the sharing of risk by entities facing common risk exposure to an individual hazard or set of hazards over a geographical area. Risk pooling members can gain risk diversification benefits such as lower premium costs while facilities based on parametric insurance policies are able to provide timely post-disaster payouts to members. The topic of sub-national catastrophe risk pools is relatively unexplored. Sub-national risk pools are advantageous as they can overcome politicised issues of compromised sovereignty and joint decision-making while enhancing insurance access for smaller, rural sub-national authorities. This research represents a starting point on design considerations for developing a sub-national flood risk pool (SNFRP). The operation of an SNFRP may result in greater spatial correlation. This may affect the financial stability of SNFRPs or diminish the risk diversification benefits over time. The balancing of fully risk-based pricing and affordability is also likely to be a significant challenge for SNFRPs, especially those operating in emerging and developing economies (EMDE). Means-based subsidies can overcome this challenge; however, donor access may be limited. In addition to donor partnerships, SNFRPs require engagements with reinsurers and national government actors to assist with risk transfer and seed capitalisation, respectively. In EMDEs, an SNFRP focused on response and relief will likely be based on parametric insurance policies. Issues such as index selection, geographical basis risk, and data and modelling needs must be carefully considered during the design of flood parametric insurance policies. Geographic basis risk may be amplified in an SNFRP operating at smaller spatial scales as flood events are not restricted to the administrative boundaries of sub-national authorities. Other issues that could influence the implementation of a sub-national facility include gaining political buy-in; access to reinsurance markets; and risk reduction incentivisation.

Expansive learning theory was deployed in this study to explore how climate scientists can learn from working in a transdisciplinary mode, particularly to co-produce knowledge and navigate complex climate risks with other actors. A qualitative case study methodology was used to investigate expansive learning for climate scientists involved in the Future Resilience of African CiTies and Lands (FRACTAL) project. Findings from the study show how several major tensions of the cultural and historical work environment of scientists limit their potential to effectively produce scientific climate change information to inform decision making in complex African cities. Novel learning aspects were introduced during transdisciplinarity, which helped the scientists grapple with these tensions. They spent much time in cities with different groups of actors learning about the complex and dynamic drivers of risks in African cities and how these might change into the future. They also learned about the diverse subjectivities, priorities and values that influence African urban decision making. The group of scientists took learning actions to change their approach for co-producing knowledge with other actors in contexts of such complexity. These learning actions demonstrate transformative agency of climate scientists to expand their activities to collaboratively navigate complex African urban climate change risks.

As socio-natural phenomena, wildfires are exacerbated by climate change and socioeconomic dynamics. However, the role of socioeconomic uncertainty in shaping future wildfire risk and management remains largely neglected. Building on the notion that risk emerges at the intersection of hazard, exposure and vulnerability, we conduct an integrative literature review to identify the most significant socioeconomic drivers of wildfire risk in the European geographical and institutional context and bring this together with the Shared Socioeconomic Pathways (SSP) perspectives on plausible socioeconomic dynamics. To our knowledge, this is the first study to bridge the gap between wildfire research and socioeconomic scenarios to establish a conceptual understanding of future wildfire risk. The resulting wildfire risk scenario space has two main applications: (i) it acts as a qualitative navigator for factoring socioeconomic uncertainty in model-based wildfire risk assessments, and (ii) it sets the boundary conditions for evaluating the feasibility of management strategies. Sustainable land use practices and profitable agricultural value chains can reduce future wildfire risk (e.g. SSP1), whereas land degradation (e.g. SSP4), and socioeconomic disparities (e.g. SSP3) may increase it. As a result, challenges to future wildfire risk management differ significantly across scenarios, leading to paradoxical situations. In scenarios where vulnerability reduction has significant potential to lower risk, socioeconomic challenges reduce the feasibility of implementing the necessary measures to achieve risk reduction. Similar dilemmas may arise in the context of hazard and exposure. By considering multiple plausible futures, this paper emphasizes the importance of accounting for socioeconomic dynamics in shaping wildfire risk and keeping the design of risk management strategies open and flexible in the face of changing circumstances.

Drawing on the securitisation and riskification of climate change literature, this paper investigates local governments’ climate risk management following a comparative analysis of three cases in the Netherlands, Norway, and Sweden. The comparative analysis reveals how unwanted consequences of climate change are translated into climate risks, identifying the actors involved in these translations. The analysis then determines the means through which the translations occur, following a risk logic that underpins a particular governmental response to climate change. The findings of this analysis have been contrasted in terms of effects and side effects of the risk logic, showing that the three local cases follow a similar pattern. This paper contributes to understanding the challenges of climate risk management in terms of fortifying existing risk practices, expert-led responses with limited citizen involvement, and long-term societal engineering.