Potential Financial Risks of Climate Change
HONGRU ZENG
Co-Presenters: Individual Presentation
College: College of Business and Public Management
Major: Finance
Faculty Research Mentor: Huaibing Yu
Abstract:
Climate change, which affects human beings in many ways, has been recognized in recent years as a new source of risk to the financial system and a major systemic risk to the global economy and financial markets (Battiston et al., 2021). The risks posed by climate change can be divided into physical risks, transition risks, and liability risks, which impact the entire economy. This study aims to explore the challenges brought by climate change on the global economy and financial market and analyze the impacts of climate change and natural disasters on the financial market through relevant theoretical studies, including direct impacts, such as the direct financial losses caused by floods and wildfires on enterprises and the global transition to a low-carbon economy. The indirect effects of policies introduced by the government and others on the market. This research provides policy-makers, investors, and businesses with a relevant analysis of the relationship between climate change and financial market dynamics. It proposes relevant strategies for adaptation and mitigation to promote sustainable development of the global financial system.