This chapter sets out the overview for understanding climate-related risks in banking systems. It examines the dual nature of climate risks, such as physical risks (from extreme weather events and chronic environmental changes) and transition risks (from political, technological, and societal shifts towards a low-carbon economy). It shows how these climate risk drivers are transmitted through traditional financial risk categories—credit, market, liquidity, operational, and reputational—through both microeconomic and macroeconomic channels. By analysing recent climate data trends and regulatory developments, it frames the urgent need for comprehensive climate risk management in financial institutions and previews the subsequent exploration of academic, regulatory, and practical perspectives on this rapidly evolving challenge.