A multinational food and beverage corporation has growing concerns that CO2 and other GHGs in the atmosphere have a negative effect on agricultural productivity. The corporation is subject to higher costs and scarce availability for commodities necessary for its supply chain.
The corporation will disclose this scenario under which climate-related risk type?
The correct answer is 'Chronic'. Climate-related risks can be classified into two main categories: physical risks and transition risks. Physical risks can be further divided into acute (event-driven) and chronic (long-term). The negative effect on agricultural productivity due to CO2 and other greenhouse gases, leading to higher costs and scarcity in the supply chain, is a long-term issue. Hence, it falls under chronic physical risks, which are associated with longer-term shifts in climate patterns such as sustained higher temperatures, changing precipitation patterns, and increased frequency of extreme weather events.
According to Garps practice exam, the answer should be C and there is no such thing as Resilience Risk
I think it should be Chronic - as the same question is Part of GARPs Practice exam.
Table 6.1 Only Market risk is mentioned as climat risk type
never read about resilience risk
Correct Answer C Chronic: This is an example of a chronic (physical) risk. The risk of changes in precipitation patterns caused by CO2 and other GHGs can lead to increased operating costs for the corporation. (p. 120)