Investors are faced with both physical and transition risks as a result of climate change, with both of these affecting the value of investments. Acute and chronic risks are classified as physical risks, which relate to the challenges faced by companies and society due to climate change, such as sudden damage from extreme weather events or the depletion of natural resources in the long run. Transition risks are defined as changes in regulation, technology, and consumer behaviour resulting from the transition to a lower-carbon economy.