Ch06. Climate Risk Measurement and Management

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What is the primary source of data for gauging physical climate hazards?

Vulnerability and resilience assessments

Global climate models developed by climate scientists (correct)

Company-level physical risk data

Downscaled models with topographical or vegetation data

What is the purpose of downscaling global climate models?

To increase the spatial and temporal resolution (correct)

To estimate physical risks

To decrease the spatial and temporal resolution

To map exposures geographically

What type of data is often combined with climate hazard risk estimates to assess physical climate risks?

Financial data

Vulnerability and resilience data (correct)

Company-level physical risk data

Topographical or vegetation data

Which of the following is an example of a global climate model?

Coupled Model intercomparison Project (CMIP) Signup and view all the answers

What is the primary purpose of using climate models in policies and new technologies?

To provide data on learning curves and pricing of solar modules Signup and view all the answers

Where can free climate data with topographical or vegetation data be obtained from?

Governmental or non-profit organizations Signup and view all the answers

What type of data is required for physical risk assessment?

Combination of historical presence and topographical data Signup and view all the answers

What is the primary goal of measuring transition risk in terms of greenhouse gas emissions?

To eliminate emissions nearly to reach a net-zero economy Signup and view all the answers

What is the purpose of the GHG Protocol in the context of climate risk measurement?

To categorize emissions into different scopes Signup and view all the answers

Which of the following is a challenge in obtaining company-level transition risk data?

Limited breadth and detail of voluntary disclosures Signup and view all the answers

What is the role of CDP in obtaining climate risk data from companies?

To collect voluntary disclosures through an annual questionnaire Signup and view all the answers

What is the limitation of company-level transition risk data obtained from voluntary disclosures?

Many companies do not disclose at all Signup and view all the answers

What is a key aspect of a risk manager's role?

Translating external trends into enterprise-level risks Signup and view all the answers

How does the banking group in the case study assess climate risk for its counterparties?

Through a scorecard system based on industry and geographical footprint Signup and view all the answers

What is the primary benefit of the climate risk scoring method used by the banking group?

It allows for differentiation between counterparties within the same sector Signup and view all the answers

What is a key factor in assessing physical climate risk?

Exposure to physical hazards Signup and view all the answers

What is the purpose of the anchor score in the banking group's climate risk assessment?

To establish a baseline for physical risk assessment Signup and view all the answers

What is the primary advantage of integrating climate risk into counterparty risk evaluation?

It provides a more comprehensive understanding of counterparty risk Signup and view all the answers

What is a primary factor that climate risk drivers can reveal about future economic conditions, according to the text?

All of the above Signup and view all the answers

Which sector of activity has the highest aggregated Climate VaR, according to the chart?

Oil and Gas Signup and view all the answers

What is the potential impact of climate risk drivers on traded assets, according to the text?

Downward price shocks and increases in market volatility Signup and view all the answers

What is the common theme among the sectors with the highest aggregated Climate VaR, according to the chart?

All are related to energy production Signup and view all the answers

What is the potential impact of climate policy on the economy, according to the text?

Change in the composition of economies Signup and view all the answers

What is the relationship between climate risk drivers and market trends, according to the text?

Climate risk drivers can increase market volatility Signup and view all the answers

What is a critical component of a holistic ERM approach in relation to climate risk drivers?

Corporate strategy Signup and view all the answers

Which analysis is commonly used for strategic planning in the context of climate risk?

SWOT analysis Signup and view all the answers

What is the primary focus of understanding the external environment in the context of climate risk?

All of the above Signup and view all the answers

What is the purpose of conducting a strategic landscape evaluation in the context of climate risk?

To inform strategic decisions on climate risk Signup and view all the answers

What is the benefit of using tools like SWOT analysis and impact mapping in the context of climate risk?

To gain a deeper understanding of the organization's climate risk profile Signup and view all the answers

What is the relationship between an organization's inputs, business activities, and outputs and climate risk?

They are affected by climate change, and understanding these impacts is critical for strategic planning Signup and view all the answers

What is the primary limitation of current carbon emissions data?

Reliance on self-reporting by companies Signup and view all the answers

What is the purpose of developing temperature scores for companies?

To provide a shorthand way of assessing a company's climate strategy alignment Signup and view all the answers

What is the primary benefit of using asset-level data in climate risk assessment?

It provides more granular information on a company's emissions Signup and view all the answers

What is the primary challenge in obtaining accurate carbon emissions data?