Physical and transition risk
BII toolkit foundations; original GAO illustration
Source: GAO analysis of reports from Mercer and TCFD; GAO-21-327. As supplied in BII toolkit capture.
CoastalFoods | Fictional teaching case

00:00:00 Two routes to business exposure
Climate risk can reach a business through physical events or economic change. This original illustration shows both routes into risk exposure.

00:00:10 Physical risk: an interrupted site
CoastalFoods is a fictional food processor. Assume flooding interrupts its site and deliveries. The event is physical; the business interruption is its consequence.

00:00:23 Transition risk: a changing market
Now assume buyers request lower emissions from production. Changing customer preferences and technology can require new investment. This is a transition pressure.

00:00:35 Different causes, financial consequences
The centre names economic losses, stranded assets and inaccurate valuation. Investigate how each exposure could affect the client, without inventing a loss estimate.

00:00:48 Keep evidence beside the assumption
For CoastalFoods, request site and disruption records, buyer requirements, and management responses. A coastal name alone does not establish a hazard or its probability.

00:01:01 Carry both questions into screening
Bring the physical and transition questions into rapid screening. Keep assumptions visible, record uncertainty, and use the relevant guidance to decide what needs closer review.

Source: https://fintoolkit.bii.co.uk/climate-change/climate-risk-management-toolkit/section-2/
Narration: local Windows speech (Microsoft Zira). Music: original locally synthesized piano accompaniment.