There are several reasons why climate change poses physical risks, including specific weather events and longer-term changes in the climate. While the exact timing and frequency of extreme weather events are unknown, their impact on the economy is expected to be more severe in the coming years, with lower Gdp growth, higher unemployment, and significant changes in asset prices and profitability. Additionally, damage to the properties and operations of borrowers could impair asset values and creditworthiness, leading to increased default rates, delinquencies, write-offs, and impairment charges in the Barcaged assets portfolios.