According to the TCFD, climate-related risks are categorised into two main types: physical and transition risks. Physical risks are direct threats posed by climate change, including acute (extreme weather events) and chronic (long-term shifts in climate patterns) risks, potentially causing asset damage, supply chain disruptions and other issues. Transition risks are associated with the shift to a low-carbon economy, including policy, technological and market changes, which can lead to financial and operational challenges for organisations.
