Climate risk and its impact on financial markets - a conceptual perspective
DOI:
https://doi.org/10.64171/JSRD.4.S1.122-126Keywords:
Climate risk, Financial stability, Systemic risk, ESG, Transition risk, Sustainable financeAbstract
The growing urgency to comprehend and manage climate risks extends far beyond the realm of environmental science—it has become a central concern for the global financial system. Climate change presents multidimensional risks that can disrupt asset valuations, strain financial stability, and challenge traditional risk management frameworks. This conceptual study synthesizes existing literature and policy insights to explore climate change as a systemic financial risk, emphasizing both physical and transition dimensions. It examines vulnerabilities in key financial sectors such as banking, insurance, energy, and real estate, while evaluating policy frameworks including the Task Force on Climate-related Financial Disclosures (TCFD) and ESG-based regulations. By drawing from secondary academic and institutional sources, the paper presents a conceptual framework that links climate dynamics with financial system resilience, contributing to policy innovation and future research pathways.
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