---
title: What do we mean by Climate-related Risk?
description: Defining the drivers of Climate-related Risk
---

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# What do we mean by Climate-related Risk?

## Defining the drivers of Climate-related Risk

#### **What is Climate-related Risk?**

The working definitions of risk used by organizations such as the International Panel of Climate Change (IPCC), and the [Task Force on Climate-related Financial Disclosures (TCFD)](https://knowledgebase.earth-scan.com/knowledge/what-are-climate-related-financial-disclosures?hsLang=en), can vary. EarthScan takes a definition of climate-related risk as *the potential negative impacts of climate change on human or ecological systems*. Climate-related risk is the result of dynamic interactions between climate change (climate-related hazards and long-term climate stresses) and the exposure and vulnerability of human or ecological systems. 

The concept of climate-related risk can apply to both impacts of and responses to climate change. This means that it takes into account both the physical impacts of climate change and direct socioeconomic responses to climate change.

#### **Defining Climate-related Risk**

Climate-related risks result from dynamic interactions between **hazard**, **exposure** and **vulnerability**. Essentially, a climate hazard is not a risk if no one is there to experience the consequences. To talk about risk, we need to specify that there is something *at* risk, and indicate the magnitude of that risk. 

The interactions are dynamic as these three elements can change over time. Differences in vulnerability and exposure arise from changes to environmental conditions, socioeconomic factors and inequalities.

- ***Hazard******-*** Climate-related event or activity that could expose human or ecological systems to adverse consequences, such as damage or disruption, loss of infrastructure, loss of life or injury and/or other health-related impacts.
- ***Exposure -*** the existence or presence of human or ecological systems in a place or setting that could experience adverse consequences as a result of a hazard.
- ***Vulnerability -*** describes the pre-existing conditions or characteristics of human or ecological systems - such as communities, infrastructure, ecosystems, assets - that interact with hazards and exposure to determine the level of adverse impacts they may experience.

#### **Disclosure and Climate-related Risk**

In the context of **disclosure**, climate-related risk refers to the *potential negative impacts of climate change on an organization*. This broad definition takes into account both the **physical impacts** of climate change and **socioeconomic responses** to climate change.

For organizations, disclosure recommendations break climate-related risks into two major categories: 

- ***physical*** ***risk*** from the impacts of climate change
- ***transitional risk***of moving to a low carbon economy.

Find more about these risks [here.](https://knowledgebase.earth-scan.com/knowledge/climate-related-risks-physical-and-transition?hsLang=en)

 The EarthScan Insights module currently covers the physical risks associated with climate change.

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