Certified Environmental Social and Governance Analyst (CESGA) EFFAS Practice Test 2026 - Free CESGA Practice Questions and Study Guide

A climate risk assessment is fundamentally a process of evaluating how climate change may impact a business's operations and profitability. This process involves identifying and analyzing various climate-related risks, such as physical risks from extreme weather events, transition risks related to the shift towards a low-carbon economy, and liability risks that might arise from climate-related regulations.

Such assessments help organizations understand vulnerabilities within their operations, supply chains, and markets, allowing them to develop strategies to mitigate these risks or adapt to changing conditions. Moreover, by understanding these risks, businesses can make informed decisions to support long-term sustainability and profitability.

Other options, while related to climate and business, do not capture the essence of a climate risk assessment as accurately. For example, determining the cost of climate-related lawsuits is narrower and focused on legal aspects rather than comprehensive risk evaluation. A strategy for increasing profits through climate adaptation implies a more proactive approach and does not encompass the broader evaluation of risks. Finally, forecasting future weather patterns relates to meteorological predictions rather than assessing business vulnerabilities to climate impacts.