34 Questions
What is the concept of stranded assets primarily linked to?
Creative destruction
What is an example of an industrial asset with high transition risk?
Coal-fired power plant
What is the term used to describe known oil or coal reserves that cannot be fully exploited if the agreed goals of limiting warming are to be met?
Unburnable carbon
What type of risk can also create stranded assets, similar to the physical meaning of the original metaphor?
Physical risk
What is the primary reason for the devaluation of stranded assets?
Unanticipated or premature write-downs
What is the main consequence of stranded assets in the context of climate change?
Increased risk of climate-related liabilities
What is an example of a high-emissions facility that would be exposed to tighter climate policy?
Coal-fired power plant
What is the primary factor that determines vulnerability to physical climate risk at the facility level?
Physical infrastructure
What is the concept of stranded assets primarily related to in the context of climate risk?
Transition risks
What is the term used to describe the propensity of an asset to suffer adversely from its exposure to hazards?
Vulnerability
What is the primary reason why high-emissions facilities are more likely to be affected by climate policy?
Their high carbon footprint
What type of risk is associated with acute weather hazards such as floods and cyclones?
Physical Risk
What is the focus of research and analytical efforts in recent years to better understand climate, environmental, and broader sustainability risks?
Stranded assets
Which of the following is an example of a facility-level adaptation to physical risk?
Installation of flood pumps
What type of risk is associated with policy changes, such as carbon taxes, that can render certain assets unprofitable?
Transition Risk
Which of the following is an example of a corporate-level adaptation to transition risk?
Deployment of biomass or hydrogen powered vehicles
What is the primary driver of stranded assets due to transition risk?
Technological changes, such as cheaper renewables
According to the Caldecott et al. framework, what is the formula for calculating physical risk?
Hazards x Exposure x Vulnerability
What is the main goal of the TCFD recommendations regarding climate change?
To provide decision-useful, forward-looking information on financial impacts of climate change
What is one of the key features of the TCFD recommendations?
They are designed to be adoptable by all organizations
What is the focus of the TCFD recommendations regarding climate change?
Transition to a low-carbon economy
What is the primary objective of the TCFD recommendations in terms of financial reporting?
To increase transparency and disclosure of climate-related risks
What is the relationship between the TCFD recommendations and financial filings?
The TCFD recommendations are included in financial filings
What is the ultimate goal of many countries in terms of climate change mitigation?
To achieve net-zero emissions
What is the primary challenge in modeling direct physical climate risk?
Lack of data on exposure and vulnerability
What is the key benefit of identifying and disclosing climate-related risks and opportunities through the TCFD framework?
Improved climate risk management and mitigation
What is the primary driver of transition risk in the context of climate change?
Changes in climate policy and regulation
What is the primary focus of the TCFD framework in terms of climate risk disclosure?
Disclosure of climate-related risks and opportunities
What is the primary implication of climate change for the financial sector?
Increased risk of stranded assets and devaluation
What is the primary objective of climate risk assessment in the context of the financial sector?
To identify and quantify climate-related risks and opportunities
What is the primary focus of understanding climate risk?
Understanding how physical climate hazards and drivers affect firms and financial outcomes
What is the distinct subset of climate change discussions that the TCFD framework primarily addresses?
Climate risk
What is the primary objective of viewing climate change through a risk lens?
To understand how climate change affects assets and financial outcomes
What is the primary focus of the TCFD framework in categorizing climate risk?
Physical climate hazards and drivers
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