The financial system could help achieve the global climate targets by aligning investments to sustainability. However, investors are largely exposed to carbon-intensive assets that could become stranded, thus delaying the low-carbon transition and bringing new sources of risk for financial stability, i.e., climate-related financial risks. Here, we discuss climate-related financial risks, the challenges they pose to traditional economic and financial risk assessment, and the implications for the implementation and feasibility of climate policies. We then present science-based approaches that introduce forward-looking climate risks and their deep uncertainty in financial risk management (e.g., via the climate value at risk, climate spread, climate stress-test). Finally, we present results of applications aimed at pricing climate risks in investors’ portfolios and calculating the largest losses that could lead to systemic risk, in collaboration with leading financial institutions.

Irene Monasterolo

Annual Review of Resource Economics

资源经济学年度评论提供权威的批判性评论，评估资源经济学最重要的研究进展，重点关注农业经济学、环境经济学、可再生资源和可枯竭资源。

The Annual Review of Resource Economics provides authoritative critical reviews that assess the most significant research advances in resource economics, focusing on agricultural economics, environmental economics, renewable resources, and non-renewable resources.

《Annual Review of Resource Economics》提供权威的批判性评论，评估资源经济学领域最重要的研究进展，重点关注农业经济学、环境经济学、可再生资源和不可再生资源。

Category	Quartile
经济学	2
经济学, 农业经济与政策	2
经济学, 经济学	3
经济学, 环境研究	3

Climate Change and the Financial System

ivySCI AI Smartly Parses PDF, Answers Researchers' Questions, and Helps You Understand Papers in Seconds

Journal Info

Category	Quartile
ENVIRONMENTAL STUDIES	1