{"id":30117,"date":"2025-03-10T09:41:08","date_gmt":"2025-03-10T13:41:08","guid":{"rendered":"https:\/\/www.bu.edu\/gdp\/?p=30117"},"modified":"2025-03-10T09:41:08","modified_gmt":"2025-03-10T13:41:08","slug":"mapping-global-financial-risks-under-climate-change","status":"publish","type":"post","link":"https:\/\/www.bu.edu\/gdp\/2025\/03\/10\/mapping-global-financial-risks-under-climate-change\/","title":{"rendered":"Mapping Global Financial Risks Under Climate Change"},"content":{"rendered":"
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Roat\u00e1n, Honduras. Photo by Luis Desiro via Unsplash.<\/figcaption><\/figure>\n

There is a growing concern about the potential impacts of climate change on financial stability but little quantitative evidence is available on the potential magnitude of financial risks induced by climate extremes. An accurate assessment of climate physical risk is fundamental for global financial risk management.\u00a0<\/span><\/p>\n

In a <\/span>new journal article<\/i><\/b><\/a> published in <\/span>Nature Climate Change<\/span><\/i>, Antoine Mandel, Stefano Battiston and <\/span>Irene Monasterolo<\/span><\/a> provide a forward-looking assessment of the impacts of floods, storms and wildfires on a universe of securities representative of global market capitalization, using a structural climate credit-risk model.\u00a0<\/span><\/p>\n

The authors find that there can be a substantial amplification of direct economic losses arising <\/span>from firms\u2019 financial leverage. They also highlight the importance of cross-border climate financial risks, notably the transfer of impacts from production facilities in emerging economies to firms in developed economies.<\/span><\/p>\n

The results have implications for the design and implementation of measures aimed at reducing climate-induced physical risk.\u00a0<\/span><\/p>\n

Policy recommendations:<\/b><\/h5>\n