Natural climatic risks: physical climatic risks

Natural climate risks can be divided into physical climate risks, which arise from climate change (e.g. floods and fires), and environmental risks, which relate to the consequences of environmental degradation, including excessive consumption of natural resources and ecosystem services in the new climate situation. Such risks are primarily to a large extent and in terms of the application of ESG practices large companies are exposed to. This will lead to lower profits, higher operating and capital costs, higher cost of debt financing and, as a result, higher debt burden of the most carbon-intensive companies.

Climate change brings with it a variety of risks – financial, regulatory and, of course, physical risks of climate change (risks of extreme climate events).

Physical risks are associated with the occurrence of adverse meteorological conditions and natural disasters. They are realised in the form of reduced climate predictability and increased frequency of dangerous hydrometeorological events (droughts, floods, floods, hurricanes, prolonged heavy rains, large hail, etc.).

Climate change, its rapid warming over the last decade leads to an increase in the number and intensity of extreme climatic events. These, in turn, together with meteorological phenomena, can lead to natural disasters and emergencies and, as a consequence, to significant financial losses and substantial damage to the environment. Climate change has negative consequences for humans and biodiversity, as well as for various sectors of the economy.

The climate of Kazakhstan is getting hotter: compared to the period 1961-1990, in 1991-2023 the annual temperature on average in the territory of the Republic increased by 0.9°C.

There is a steady increase in the number of days with temperatures above 30-35°C, which is especially noticeable in the south, south-west and west of the country. Due to climate change, cases of abnormal heat in Kazakhstan are recorded more often.

For example, in 2023 the temperature reached a record high, exceeding the climatic norm by 1.92°C, which updated the previous record of 1.89°C set in 2013.

To avoid this, we need to act on two fronts: reducing greenhouse gas emissions and adapting to current and future changes.

The risks of such events need to be clearly predicted and assessed, and adaptation plans for such unfavourable climate events need to be developed in a timely manner.

Physical climate risks need to be assessed from the following sources:

Atmosphere: very strong wind (including hurricane, squall, tornado), drought, frost, abnormal heat (cold), large hail, abnormal precipitation, thunderstorms, extremely high fire danger.

Hydrosphere: floods (due to floods, floods, jams, heavy downpours), channel deformations, rise in the level of the World Ocean.

Cryosphere and lithosphere: avalanches, landslides, mudslides, karsts and other phenomena.

The nature and severity of the impacts of extreme climatic events depend not only on the events themselves, but also on exposure and vulnerability.

Adverse impacts are considered disasters when they cause widespread damage and result in dramatic changes in the normal functioning of the territory’s population, infrastructure, industry or society as a whole. Climate extremes, exposure and vulnerability are influenced by a wide range of factors, including climate change due to human activities, natural climate variability, various meteorological phenomena and the socio-economic development of the territory at risk of climate extremes. All this needs to be taken into account in risk assessment.

Nowadays, mankind has more information about the state of the environment and improved computational capabilities. With the methodology developed by scientists, it is possible to analyse ecosystem and climate-related risks and find functional relationships between climate and surface conditions from remote sources, taking into account topography. However, it should be noted that the ability to predict future changes is limited due to the complexity of the systems. In most cases, it is only possible to describe and calculate values that lie between known equilibrium values at different locations and time points because the systems are too complex for accurate predictions.