https://academy.ecoworld.ai/assets/m003-climate-risks-scenario-analysis-D2ypJI4n.js

1import{u as h,j as e}from"./index-DDySpvvx.js";const p={content_id:"AC2605-975b1969_m003",course_id:"AC2605-975b1969",course_name:"ESRS E1 — Climate Change Masterclass",module_id:"m003",module_name:"Climate-Related Risks & Scenario Analysis",module_number:"2",day:"E1-2",slug:"/courses/AC2605-975b1969/m003-climate-risks-scenario-analysis",source_file:"/academy/courses/AC2605-975b1969/m003/m003-climate-risks-scenario-analysis.mdx",content_granularity:"module",sidebar_label:"2 — Climate Risks (E1-2)",sidebar_position:2,doc_type:"module",status:"published",version:"1.0.0",lessons:[{lesson_id:"l001",lesson_name:"Identifying Physical & Transition Risks",anchor:"physical-and-transition-risks",estimated_duration_minutes:14,learning_objectives:["Classify physical (acute/chronic) and transition risks","Identify climate-related opportunities"]},{lesson_id:"l002",lesson_name:"Scenario Analysis Methods",anchor:"scenario-analysis-methods",estimated_duration_minutes:16,learning_objectives:["Explain why scenario analysis is not forecasting","Select at least two scenarios and three time horizons"]},{lesson_id:"l003",lesson_name:"Running a Scenario Analysis",anchor:"running-a-scenario-analysis",estimated_duration_minutes:10,learning_objectives:["Apply a six-step scenario analysis process to a business"]}],module_quiz_bank:["AC2605-975b1969_m003_g001"],estimated_duration_minutes:45,difficulty_level:"intermediate",learning_objectives:["Classify physical and transition climate risks and opportunities","Design a scenario analysis across at least two scenarios and three time horizons"],frameworks:["ESRS_E1","TCFD","IPCC","NGFS"],concepts:["physical_risk","transition_risk","scenario_analysis","climate_opportunity"],related_content:["AC2605-975b1969_m004","AC2605-975b1969_m002"],owners:["[email protected]"],last_updated:"2026-05-11T00:00:00.000Z",tags:["academy","climate","esrs-e1","risk"],security_level:"public",classification:["Environmental","Academy"]};function d(i){const s={em:"em",h1:"h1",h2:"h2",hr:"hr",li:"li",ol:"ol",p:"p",strong:"strong",table:"table",tbody:"tbody",td:"td",th:"th",thead:"thead",tr:"tr",ul:"ul",...h(),...i.components},{Callout:n,DownloadTemplate:a,InteractiveScenario:o,KnowledgeCheck:r,QuizPreview:c,ScormEmbed:l}=s;return n||t("Callout"),a||t("DownloadTemplate"),o||t("InteractiveScenario"),r||t("KnowledgeCheck"),c||t("QuizPreview"),l||t("ScormEmbed"),e.jsxs(e.Fragment,{children:[e.jsx(s.h1,{id:"climate-related-risks--scenario-analysis",children:"Climate-Related Risks & Scenario Analysis"}),`
2`,e.jsx(n,{type:"opening_hook",children:e.jsx(s.p,{children:"In 2023, climate-related disasters caused over €13.4 billion in insured losses across Europe alone — floods in Slovenia, wildfires in Greece, storms across Germany and France. These are not abstract future risks; they are today's business reality. But climate risk is not only physical. The shift to a low-carbon economy creates transition risk that can be just as disruptive. E1-2 requires you to identify, assess and disclose both — and to stress-test your strategy with scenario analysis."})}),`
3`,e.jsx(s.hr,{}),`
4`,e.jsx(l,{packageUrl:"https://cdn.ecoworld.ai/scorm/AC2605-975b1969/m003",title:"Identifying Physical & Transition Risks"}),`
5`,e.jsx("span",{id:"physical-and-transition-risks"}),`
6`,e.jsx(s.h2,{id:"1-identifying-physical--transition-risks",children:"1. Identifying Physical & Transition Risks"}),`
7`,e.jsx(s.p,{children:"Every climate-related risk falls into one of two buckets."}),`
8`,e.jsxs(s.p,{children:[e.jsx(s.strong,{children:"Physical risks"})," come from the direct effects of climate change on your operations, assets, supply chain and people. They split into ",e.jsx(s.em,{children:"acute"})," risks — event-driven and often severe (floods, storms, wildfires, heatwaves) — and ",e.jsx(s.em,{children:"chronic"})," risks — gradual, long-term shifts (sea-level rise, water scarcity, rising average temperatures) that erode value slowly but relentlessly."]}),`
9`,e.jsxs(s.p,{children:[e.jsx(s.strong,{children:"Transition risks"})," arise not from climate change itself but from society's response to it. As the world shifts toward a low-carbon economy, unprepared companies face four categories of risk:"]}),`
10`,e.jsxs(s.table,{children:[e.jsx(s.thead,{children:e.jsxs(s.tr,{children:[e.jsx(s.th,{children:"Category"}),e.jsx(s.th,{children:"What It Means"}),e.jsx(s.th,{children:"Examples"})]})}),e.jsxs(s.tbody,{children:[e.jsxs(s.tr,{children:[e.jsx(s.td,{children:"Policy & Legal"}),e.jsx(s.td,{children:"New regulations, carbon pricing, litigation"}),e.jsx(s.td,{children:"EU ETS increases, CBAM, climate litigation, mandatory disclosure"})]}),e.jsxs(s.tr,{children:[e.jsx(s.td,{children:"Technology"}),e.jsx(s.td,{children:"New tech making existing approaches obsolete"}),e.jsx(s.td,{children:"EVs replacing ICE, renewables undercutting fossil fuels, green hydrogen"})]}),e.jsxs(s.tr,{children:[e.jsx(s.td,{children:"Market"}),e.jsx(s.td,{children:"Changing supply and demand dynamics"}),e.jsx(s.td,{children:"Customers demanding low-carbon products, green procurement, carbon-conscious investors"})]}),e.jsxs(s.tr,{children:[e.jsx(s.td,{children:"Reputation"}),e.jsx(s.td,{children:"Stakeholder perception of climate performance"}),e.jsx(s.td,{children:"Greenwashing accusations, ESG downgrades, talent difficulties"})]})]})]}),`
11`,e.jsx(s.p,{children:"Physical and transition risks often interact: a company in a flood-prone area (physical) that also relies on carbon-intensive processes (transition) faces a compound challenge."}),`
12`,e.jsx(n,{type:"key_concept",title:"Opportunities Are Required Too",children:e.jsx(s.p,{children:"Risk is only half the picture. E1-2 also requires you to identify climate-related opportunities: resource efficiency, new green markets, energy-source diversification, resilience as competitive advantage, and improved access to capital (green bonds, sustainability-linked loans). The companies that thrive treat climate as an opportunity to capture, not just a risk to manage."})}),`
13`,e.jsx(r,{question:"Under E1-2, what are the two main categories of climate-related risks?",options:[{key:"a",text:"Operational risks and reputational risks",correct:!1,explanation:"Reputational risk is one sub-category of transition risk, not a top-level category."},{key:"b",text:"Physical risks and transition risks",correct:!0,explanation:"Correct. Physical (acute + chronic) and transition (policy, te

13chnology, market, reputation) are the two categories."},{key:"c",text:"Financial risks and regulatory risks",correct:!1,explanation:"These are components, not the two E1-2 categories."},{key:"d",text:"Market risks and technology risks",correct:!1,explanation:"Both are sub-categories of transition risk."}],linkedLesson:"physical-and-transition-risks"}),`
14`,e.jsx("span",{id:"scenario-analysis-methods"}),`
15`,e.jsx(s.h2,{id:"2-scenario-analysis-testing-your-strategy-against-the-future",children:"2. Scenario Analysis: Testing Your Strategy Against the Future"}),`
16`,e.jsxs(s.p,{children:["Scenario analysis is the centrepiece of E1-2. It is a structured method for asking: ",e.jsx(s.em,{children:"how would our business perform if the future unfolds differently than we expect?"})," It is ",e.jsx(s.strong,{children:"not"})," forecasting — it does not predict what will happen. Instead it explores multiple plausible futures and tests whether your strategy is robust across all of them."]}),`
17`,e.jsxs(s.p,{children:["E1-2 expects ",e.jsx(s.strong,{children:"at least two scenarios"}),": a 1.5°C-aligned scenario (successful transition — high transition risk, lower physical risk) and a higher-warming scenario such as 2.5–3°C+ (insufficient action — lower transition risk, severe physical impacts). Many companies add a middle-ground 2°C scenario to bracket the range."]}),`
18`,e.jsxs(s.table,{children:[e.jsx(s.thead,{children:e.jsxs(s.tr,{children:[e.jsx(s.th,{children:"Horizon"}),e.jsx(s.th,{children:"Typical Period"}),e.jsx(s.th,{children:"Dominant Risk Type"})]})}),e.jsxs(s.tbody,{children:[e.jsxs(s.tr,{children:[e.jsx(s.td,{children:"Short-term"}),e.jsx(s.td,{children:"1–3 years"}),e.jsx(s.td,{children:"Policy changes, market shifts, extreme weather already occurring"})]}),e.jsxs(s.tr,{children:[e.jsx(s.td,{children:"Medium-term"}),e.jsx(s.td,{children:"3–5 years"}),e.jsx(s.td,{children:"Technology disruption, carbon pricing escalation, supply-chain restructuring"})]}),e.jsxs(s.tr,{children:[e.jsx(s.td,{children:"Long-term"}),e.jsx(s.td,{children:"5+ years (to 2050)"}),e.jsx(s.td,{children:"Chronic physical change, structural economic shifts, stranded assets"})]})]})]}),`
19`,e.jsx(n,{type:"warning",title:"What You Must NOT Do",children:e.jsx(s.p,{children:'Do not present a single optimistic scenario as your only analysis, and do not offer a "guarantee" that the business will survive all scenarios. The purpose of E1-2 is honest assessment, not reassurance.'})}),`
20`,e.jsx(r,{question:"How many scenarios does E1-2 expect a company to test, at minimum?",options:[{key:"a",text:"One optimistic scenario",correct:!1,explanation:"A single scenario cannot bracket the range of plausible futures."},{key:"b",text:"At least two — a 1.5°C-aligned and a higher-warming scenario",correct:!0,explanation:"Correct. At least two scenarios are required to test resilience across divergent futures."},{key:"c",text:"Exactly five scenarios",correct:!1,explanation:"There is no fixed number of five; the minimum is two."},{key:"d",text:"None — scenario analysis is optional under E1-2",correct:!1,explanation:"Scenario analysis is the centrepiece of E1-2, not optional."}],linkedLesson:"scenario-analysis-methods"}),`
21`,e.jsx("span",{id:"running-a-scenario-analysis"}),`
22`,e.jsx(s.h2,{id:"3-running-a-scenario-analysis",children:"3. Running a Scenario Analysis"}),`
23`,e.jsx(s.p,{children:"You do not need a team of climate scientists. A practical scenario analysis follows six steps:"}),`
24`,e.jsxs(s.ol,{children:[`
25`,e.jsxs(s.li,{children:[e.jsx(s.strong,{children:"Define the scope"})," — own operations, value chain, specific geographies?"]}),`
26`,e.jsxs(s.li,{children:[e.jsx(s.strong,{children:"Select scenarios"})," — at least two recognised scenarios (IEA Net Zero, IPCC RCPs, NGFS scenarios)."]}),`
27`,e.jsxs(s.li,{children:[e.jsx(s.strong,{children:"Identify risks and opportunities"})," — for each scenario, map the most relevant physical and transition risks and opportunities."]}),`
28`,e.jsxs(s.li,{children:[e.jsx(s.strong,{children:"Assess impact"})," — estimate the potential financial, operational and strategic impact of each risk."]}),`
29`,e.jsxs(s.li,{children:[e.jsx(s.strong,{children:"Test resilience"})," — under each scenario, can the business model continue to operate and create value?"]}),`
30`,e.jsxs(s.li,{children:[e.jsx(s.strong,{children:"Document and disclose"})," — record scenarios, assumptions, time horizons and key findings."]}),`
31`]}),`
32`,e.jsx(n,{type:"key_concept",title:"Worked Example — EuroTrans",children:e.jsxs(s.p,{children:["A fictional logistics company (2,000 trucks, 30 warehouses). Under a 1.5°C scenario, transition risk is HIGH: EU ETS expansion to transport plus rising diesel adds ~€45M annual cost by 2030 — but early electric-fleet movers gain a 3–5 year advantage. Under a 3°C scenario, p

32hysical risk is HIGH: 8 of 30 warehouses sit in flood zones and Southern European suppliers face chronic drought. The key insight: the company faces significant risk in ",e.jsx(s.em,{children:"both"})," scenarios — but of different kinds. The transition plan must address both."]})}),`
33`,e.jsx(o,{id:"m003-risk-matrix",title:"Assignment: Map 5 Climate Risks Using the Risk Matrix",description:"Using the Climate Risk Tracker, identify five climate risks facing a sample organisation — at least two physical and two transition — and place each on a likelihood × impact matrix across short, medium and long-term horizons."}),`
34`,e.jsx("span",{id:"key-takeaways"}),`
35`,e.jsx(s.h2,{id:"key-takeaways",children:"Key Takeaways"}),`
36`,e.jsx(n,{type:"key_takeaway",children:e.jsxs(s.ul,{children:[`
37`,e.jsx(s.li,{children:"Two risk categories: physical (acute + chronic) and transition (policy, technology, market, reputation)."}),`
38`,e.jsx(s.li,{children:"Scenario analysis is not forecasting — it tests resilience across multiple plausible futures."}),`
39`,e.jsx(s.li,{children:"At least two scenarios are required: a 1.5°C pathway and a higher-warming pathway."}),`
40`,e.jsx(s.li,{children:"Assess three time horizons: short (1–3y), medium (3–5y), long (5y+)."}),`
41`,e.jsx(s.li,{children:"Opportunities are required too — climate action creates value, not just cost."}),`
42`,e.jsx(s.li,{children:"The analysis must cover the value chain, not just own operations."}),`
43`]})}),`
44`,e.jsx(s.hr,{}),`
45`,e.jsx(n,{type:"whats_next",title:"Module 3 — E1-3: Resilience",children:e.jsx(s.p,{children:"Scenario analysis tells you what could happen. Resilience assessment tells you how well you would cope. Module 3 shows you how to assess resilience and plan adaptation actions."})}),`
46`,e.jsx(a,{title:"Download Module 2 E-book — Climate Risks & Scenario Analysis (PDF)",href:"https://cdn.ecoworld.ai/academy/AC2605-975b1969/ebooks/ebook_m02_climate_risks.pdf",format:"PDF"}),`
47`,e.jsx(a,{title:"Climate Risk Tracker (XLSX)",href:"https://cdn.ecoworld.ai/academy/AC2605-975b1969/tools/09_climate_risk_tracker.xlsx",format:"XLSX"}),`
48`,e.jsx(c,{quizBankId:"AC2605-975b1969_m003_g001",count:3})]})}function m(i={}){const{wrapper:s}={...h(),...i.components};return s?e.jsx(s,{...i,children:e.jsx(d,{...i})}):d(i)}function t(i,s){throw new Error("Expected component `"+i+"` to be defined: you likely forgot to import, pass, or provide it.")}export{m as default,p as frontmatter};