Countries around the world have been facing the threat of extreme disasters in recent years, including extreme rainfall, high temperatures, and droughts. Various kinds of losses, their frequency, and the amounts of losses have shown an obvious upward trend. In addition to the direct economic losses caused by disasters, the recovery, reconstruction, and financial problems faced by the governments of various countries are severe challenges after the catastrophe. The impact of the huge losses caused by climate change on the financial system for industries has become more and more obvious, exposing banking and insurance firms to credit and compensation risks. In response to the increasing risks of climate disasters, the industries have begun to follow the Task Force on Climate-Related Financial Disclosures (TCFD) to introduce the concept of climate-related financial disclosure. It is expected that through the promotion of TCFD-aligned disclosures, a comprehensive understanding of the risks and possible opportunities of climate change will be achieved.

The study on Climate Change Risk Assessment for Business (CCRAB) sponsored by Academia Sinica, Taiwan, which was developed in the context of the above-mentioned project, aims to develop a climate change risk assessment tool and platform for business by using high-resolution climate data and risk assessment tools and improve on the cross-disciplinary integration among research institutes and practical agencies. The overall results of the project can be considered as a step forward for the promotion of sustainable development among Taiwanese enterprises as well as a notable establishment of the scientific foundation for TCFD-aligned disclosures in Taiwan. It is expected that developing a climate change risk assessment tool and platform for business can help industries assess their own climate change risks and be better prepared for adaptation.

In this project the Risk Society and Policy Research Center (RSPRC) is responsible for Subproject 2: climate change risk assessment for key industries. The disclosure framework of TCFD includes four disciplines: metrics measuring and target setting, risk management, response strategies and governance, and risk management including quantification of disaster risk. Quantification of climate change risk requires two components: data construction and quantitative assessment. First, there is still a lack of basic data for TCFD climate risk quantification and assessment in Taiwan, and the establishment of the database still relies on basic domestic and foreign policy tracking and research. Therefore, this subproject will construct a climate risk financial database. Second, industries in Taiwan have not yet established a suitable methodology to quantify the risks induced by various natural disasters. Based on existing climate change data and those provided by Subproject 1, this study selects key industries (electronics industry, manufacturing, energy industry, and financial industry) to conduct assessment research of physical risk and transition risk in order to establish relevant indicators and models. This study also analyzes the disaster-causing factors of each industry and evaluates the current and future risks of related industries. We shall provide the relevant information to Subproject 3 to build a climate change risk assessment tool and platform for business.