Module 1: Physical Risks
The Anatomy of Risk
A climate risk materializes when hazard, exposure, and vulnerability interact to produce damages and loss. The Intergovernmental Panel on Climate Change IPCC (2012, p. 69) defines each of the first three elements as follows:
| Hazard | “The possible, future occurrence of natural or human-induced physical events that may have adverse effects on vulnerable and exposed elements. |
| Exposure | “The inventory of elements in an area in which hazard events may occur.” |
| Vulnerability | “The propensity of exposed elements such as human beings, their livelihoods, and assets to suffer adverse effects when impacted by hazard events.” |
When a vulnerable element is exposed to a hazard, some quantifiable amount of damage and loss is suffered. Though businesses are often most concerned with the financial value of damages and loss, public agencies and governments are concerned with a broad range of losses (such as loss of human life, displacement, etc.)