When the International Sustainability Standards Board (ISSB) introduced IFRS S2, it signaled a significant change in climate-related financial disclosures. Much of the debate has centered on transition risks and long-term climate trends, but an equally urgent aspect involves sudden, event-driven physical risks. These include abrupt climate shocks, such as hurricanes, wildfires, severe floods, and heatwaves, which can disrupt operations, damage assets, and cause ripple effects in global markets within hours.
Under IFRS S2, acute risks are identified as event-driven, climate-related threats that are significant for companies and investors. Unlike chronic risks, which develop slowly over decades, acute risks strike suddenly. A single storm can disable power grids, halt transportation systems, damage water infrastructure, and cause billions of dollars in losses. For companies, disclosure is no longer optional—investors, regulators, and insurers all expect transparency about how organizations handle these shocks.
IFRS S2 requires companies to demonstrate how they govern and oversee climate-related risks, identify which immediate hazards are most material to their assets, and explain how these are integrated into enterprise risk management. Importantly, it also requires metrics and scenario analysis. Organizations must go beyond narratives and quantify the financial impact of immediate events—whether through downtime, operational losses, insurance claims, or standardized measures like Expected Annual Loss. Scenario-based forecasting is crucial, as many “100-year” events are now occurring every 10 to 20 years in key markets.
The sectors most exposed to immediate risk are also some of the most essential to society. Infrastructure and utilities face outages and grid failures precisely when communities need them most. Real estate assets might be damaged or lose value overnight. Financial institutions and insurers experience surges in defaults and claims. Supply chains can come to a halt as ports, airports, and transport networks shut down. These are not just theoretical risks — they are tangible, urgent, and measurable.
However, revealing urgent risks isn’t easy. Many organizations have limited access to local hazard projections or struggle to link losses to climate change directly. Regulators want forward-looking disclosures, but traditional methods often fall short, relying on regional averages or backward-looking data.
This is where ClimaTwin plays a role. Our AI-powered Climate Business Intelligence™ platform enables companies and cities to leverage climate science into actionable financial insights. ClimaTwin combines high-resolution climate models with asset-specific data, providing decision-ready metrics such as Value at Risk (VaR) and Expected Annual Loss (EAL). Our modular design enables stakeholders to analyze a single asset or expand across entire portfolios, while our reporting features align directly with IFRS S2, CSRD, CSDR, and California SB-261. What once took months of consulting and millions of dollars can now be delivered in seconds, with built-in transparency, comparability, and regulatory compliance.
Acute climate risks are no longer rare anomalies—they are the new business reality. IFRS S2 clearly states that companies and cities must address them now, not in the future. ClimaTwin helps leaders go beyond mere compliance, turning climate risk into a competitive advantage, improved capital efficiency, and increased resilience.
Ready to get started? To learn how ClimaTwin can help you assess the physical and financial impacts of future weather and climate extremes on your infrastructure assets, capital programs, and investment portfolio, please visit www.climatwin.com today.
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