PRMIA and global financial regulators defineclimate riskas the financial, operational, and societal risks arising fromclimate change.

Climate risks impact businesses throughphysical risks(e.g., floods, wildfires) andtransition risks(e.g., regulatory changes, carbon pricing).

Option A ("Climate risk has been moved out of all risk taxonomies due to international agreement")

Incorrect becauseclimate risk is now a central part of risk taxonomies, as emphasized by PRMIA, Basel III, and TCFD.

Option B ("Climate risk refers to the growing impacts of credit risk on the business environment")

Incorrect because credit risk is justone aspectof climate risk, not the full definition.

Option C ("Climate risk refers to change in the business climate during a recession")

Incorrect becauseclimate risk is about environmental change, not economic cycles.

Step 1: Definition of Climate RiskStep 2: Why the Other Options Are Incorrect

PRMIA Climate Risk Guidelines– Defines climate risk as a financial and societal risk due to climate change.

TCFD (Task Force on Climate-Related Financial Disclosures)– Outlines regulatory expectations for climate risk management.

PRMIA Risk References Used:

Final Conclusion:Climate risk involvesphysical and transition risks from climate change, makingOption D the correct answer.