Week 10: Physical and Transition Risk

Question 1

What are physical risks?

Answer 1

Threats and opportunities related to changing weather patterns
For example:
* Increasing frequency of drought
* Water availability
* Increase in temperatures/rising sea level
* Extreme weather events
(cyclones/hail/flooding)

Question 2

What are transition risks?

Answer 2

Challenges and opportunities related to regulation and market changes.
For example:
* Changes in purchasing behaviour
* Customer expectations and
requirements
* Govt regulation and policy (inc. market access)
* Technology changes
* New financing criteria and products

Question 3

What are the limitations?

Answer 3

• The consequences
• The timeframe
• The boundary

Question 4

How will the analysis be used in decision-making?

Answer 4

• Changes in risk
• Cost-effectiveness
• Cost-benefit analysis
• Risk acceptance
• As low as reasonably practicable (ALARP)

Question 5

What is the forward approach?

Answer 5

Identify the initiating event and other relative events/risks

Question 6

What is the backward approach?

Answer 6

Instead of identifying the event, we start to identify the consequences