Physical climate risks such as flooding, heatwaves, droughts, and extreme weather events are no longer distant or hypothetical threats. They already affect asset values, operational continuity, insurance costs, and long-term financial performance. As a result, understanding and quantifying physical climate risk has become essential for financial institutions.

Alpha-Klima’s whitepaper on the financial impact of physical climate risk provides a structured framework to move from climate data to financial insight. It explores how climate hazards translate into economic loss through asset exposure, vulnerability, and damage functions, creating a transparent and auditable methodology suitable for regulatory and strategic use.

The whitepaper explains how physical climate risk can be assessed at both asset and portfolio level, highlighting the importance of spatial granularity and scenario-based analysis. By linking climate projections with financial modeling, institutions can estimate potential losses under different climate futures and identify concentrations of risk that may otherwise remain hidden.

This approach supports not only regulatory compliance, but also internal risk management, investment analysis, and resilience planning. Risk managers, CFOs, sustainability officers, and compliance teams can all use the insights as a common reference point.

Physical climate risk is now a core financial risk. This whitepaper equips institutions with the knowledge and methodology needed to understand, quantify, and act on climate-driven financial impacts in a structured and defensible way.