Second order risks associated with physical and transition climate risks have the potential to impact the retail and wholesale portfolios of Barclays Bank Group. Climate change may lead to increased losses in sectors that are sensitive to physical and transition risks. Any subsequent increase in defaults and rising unemployment could create recessionary pressures, which could lead to a wider deterioration in the creditworthiness of the Bank's clients, higher ECLs, and increased charge-offs and defaults among retail customers.