How can physical climate risk mitigation, adaptation, and resilience techniques be fully understood and integrated into the decision-making process - Amin, Francisco, Koorshy, Ranger, and Gallagher - ASWQ V3I2 - March 2025

The financial sector is increasingly acknowledging the urgency of addressing physical climate risks, which are impacting infrastructure, economies, and communities. Previously overlooked, these risks—such as floods, heat, and droughts—are now being integrated into investment strategies, particularly in regions like Africa and Asia. Financial institutions are recognizing the material impact of these risks on supply chains and critical sectors like food production. While adaptation and resilience were once secondary to mitigation, there is growing awareness that both must be prioritized. Tools and data for assessing these risks are now available, but challenges remain in integrating them effectively across portfolios. Dr. Nicola Ranger and Dr. Amal-Lee Amin discuss strategies for managing these risks, emphasizing the need for both adaptation and mitigation. They stress the importance of using quantitative tools, developing adaptation plans, and investing in vulnerable sectors, particularly in emerging markets like agriculture.