Climate risks are evaluated for both the current situation, based on observations, and potential future scenarios. The assessment considers a set of risk criteria that reflect the underlying objectives, targets, and values associated with the specific context. This framework supports Climate Risk Management (CRM) by facilitating risk reduction and climate change adaptation strategies.

The objectives of the four phases of a risk assessment can be described as follows.

1. Scoping means to design a risk assessment in a way that it can support CRM by taking into account existing objectives, goals and values and the existing policy and planning framework.
2. Risk identification aims to identify relevant hazards, impacts and risks starting from existing knowledge and expert input.
3. Risk analysis describes key risks in more in-depth by analysing the risk components (hazards, exposure factors, vulnerabilities), understanding their interrelation as well as the resulting cascading impacts with the help of impact chains.
4. Risk evaluation means evaluating the severity of risk based on criteria and drawing conclusions out of the risk assessment with respect to risk tolerance as well as the demand and the urgency for risk reduction measures.

The primary objective of a Climate Risk Assessment (CRA) is to provide information and support for CRM. It involves understanding climate risks, the drivers of these risks (including exposure and vulnerabilities), and their underlying root causes. The assessment also aims to identify the demand and entry points for Climate Change Adaptation (CCA) strategies. However, the ultimate goal of CRM is to facilitate climate-resilient development. Climate‐resilient development can be understood as integrating both CCA and mitigation decisions together, with the goal of achieving long term sustainable development.

To ensure that a CRA effectively supports CRM, it is important to identify potential options for reducing climate risks within specific contexts. These options can include both Disaster Risk Reduction (DRR) measures and adaptation strategies.

Nevertheless, it is not possible to eliminate all climate-related risks. Adaptation has its limitations, reaching a threshold where the objectives or system requirements of an actor cannot be fully protected from unacceptable risks through adaptive actions. Residual risks can give rise to extensive losses and damages resulting from the impacts of climate change.

Assessing and managing climate-related risk is a highly complex and cross-cutting process that is of relevance to a diverse set of stakeholders, ranging from scientists, policy- and decision makers, practitioners, private sector representatives, NGO representatives, to citizens and most notably vulnerable groups. To ensure an inclusive approach to the CRA design, it is crucial to incorporate considerations of differential vulnerabilities and gender aspects from early on in the design phase. As far as possible, all relevant data used in a CRA should be disaggregated by gender and capture a wide range of gender identities.

Impact chains form the backbone of risk analysis in the Climate Risk Sourcebook. These chains can be constructed through a participatory approach involving experts and stakeholders. Regardless of the approach used, it is essential for impact chains to reflect the most accurate and evidence-based understanding of specific risks within a particular region and at a specific scale. Explore some example impact chains derived from the key risks of the  IPCC AR6 here. 

The ‘elements’ of an impact chain are addressing all components of risk drivers:

• climate related hazards that have impacts and adverse consequences,
• a series of direct and indirect impacts that are caused by the hazard(s),
• the exposed elements, subsystems or functions that are affected by these impacts,
• factors that make exposed elements, subsystems or functions vulnerable, including physical or ecological factors, that lead to a sensitivity or susceptibility for specific impacts as well as factors that describe a lack of capacity to prepare, prevent, respond, cope or adapt.
• other underlying risk drivers that are affecting vulnerability or exposure.

Within these impact chains, key impacts that are leading to key risks can be identified. The analysis and assessment of key impacts and key risks is one of the main objectives of a CRA. See examples of Hazard, Vulnerability and Exposure factors here. 

The quality of the results of a risk assessment depends to a great extent on the quality of the data, information and knowledge for the current situation as well as for potential future situations. Considering their confidence and uncertainty is crucial.