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SCR Q&a 6

An insurance firm analyzes climate risk to inform its sustainable strategy. A risk analyst researches how climate risk can financially impact companies, such as through increased liquidity risk from events like flooding damaging a bank's business and requiring customers to withdraw deposits and draw on credit lines to finance recovery costs.

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59 views2 pages

SCR Q&a 6

An insurance firm analyzes climate risk to inform its sustainable strategy. A risk analyst researches how climate risk can financially impact companies, such as through increased liquidity risk from events like flooding damaging a bank's business and requiring customers to withdraw deposits and draw on credit lines to finance recovery costs.

Uploaded by

mirjanazlatanovic
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Question #11Topic 1

An insurance firm announces it will adopt sustainable practices. To inform


sustainable strategy, a company risk analyst researches climate risk. The analyst
reviews how climate risk manifests as financial risk through effects on microeconomic
company-level risks on various types of companies and institutions. The analyst also
identifies possible opportunities resulting from climate risk. Risks and opportunities
are presented to senior management.
Which of the following does the analyst cite as an example of how climate risk affects
liquidity risk?

 A. A company’s warehouse that is damaged by a tornado causes business interruption


that results in loss of revenues and profits, which weakens the company’s ability to
repay loans.
 B. A mining company that extracts lithium for lithium-ion batteries benefits from higher
commodity prices, which increases revenue and profits.
 C. A company’s high-emissions factory is hit with a higher carbon tax that results in
asset stranding, which causes the company to have less collateral to use to secure
funding.
 D. A bank’s customers withdraw deposits and draw on credit lines to finance cash-flow
needed for recovery after damaging flooding, which increases loan-to-deposit ratios.

Hide Solution Discussion

Correct Answer: D 🗳️

Question #12Topic 1
An investment analyst assesses climate-related stranded asset risk for a portfolio of
energy companies. The analyst develops a list of companies potentially exhibiting
stranded asset risk. After a more granular examination, the analyst summarizes
corporate activity in the following table:

The analyst identifies the company with the highest stranded asset exposure for
possible divestment. Which company does the analyst recommend for divestment?

 A. Utility
 B. Oil & Gas
 C. Technology startup
 D. Hydroelectric
Hide Solution Discussion 7

Correct Answer: B 🗳️

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