Climate change risks that a company confronts include physical risks and transition risks. The physical risks refer to the direct damage to asset values and business activities, which can be either acute or chronic in nature. Acute physical risks are driven by extreme weather events such as floods, droughts, and storms. These risks cause immediate damage to infrastructure, supply chains, and even overall business operations. For example, severe storms may disrupt power grids, leading to energy supply interruptions, while floods can destroy production facilities and the availability of natural resources. Chronic physical risks, on the other hand, are related to longer-term shifts in climate patterns, including global warming, rising sea levels, and changing precipitation patterns. These gradual changes create persistent challenges, such as rising temperatures affecting agriculture, or the slow but steady encroachment of seawater on coastal assets. The cumulative effect of these physical risks could be significant as they lead to higher operating costs, reduced production capacity, and lower efficiency in business operations. As a result, companies face greater financial pressures and have to invest more in adapting to these climate-induced challenges.