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 divided into two categories: acute risks relating to the challenges that climate change poses to companies and society, such as unexpected damage caused by extreme weather events or the depletion of natural resources over a longer period, while transition risks relates to changes in regulation, technology, and consumer behaviour resulting from the transition to a lower-carbon economy.