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 in the long run, and transition risks relating to changes in regulation, technology, and consumer behaviour resulting from the transition to a lower-carbon economy.