Like black swan events, “green swan” events will be very difficult to predict and will hit with little warning. The potential for a cascading series of crises stemming from climate change threatens global financial stability, and the world’s central banks are not equipped to respond to them, or even predict what exactly might unfold, the 100-page BIS report said.
Risk in the Time of Climate Change
The financial risk from climate change is typically put into two categories: physical risk and transition risk. The former refers to natural disasters or some other climate-related calamity that imposes steep costs on society from physical damage, such as a drought or a hurricane.