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Exam SCR topic 1 question 42 discussion

Actual exam question from GARP's SCR
Question #: 42
Topic #: 1
[All SCR Questions]

A large real estate investment firm increases resources to understand transition and physical risks as it expands into markets with climate regulations and increasing flooding events. Senior leadership requires the risk team train all business units in understanding how both climate risks can impact operations.
During this process, how should the risk team define commonalities between both risks?

  • A. Each risk type can lead to stranded assets of investee companies.
  • B. Renewable energy investment returns will likely increase as each risk type grows.
  • C. The timing of impacts from each risk type will follow similar trajectories.
  • D. The majority of impacts from each risk type will manifest after 2050.
Show Suggested Answer Hide Answer
Suggested Answer: D 🗳️

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Anil_SUPER_STAR
6 months, 3 weeks ago
Correct Answer is A: Unlike stranded assets due to transition risk, which are likely to be more concentrated in the energy and industrial sectors, stranding due to physical risk can occur across nearly all sectors..
upvoted 2 times
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SustainAble
1 year ago
correct is D as it says "the majority". A cannot be for sure as to become stranded assets require exposure and vulnerability assessment
upvoted 2 times
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Karnitschnig
1 year ago
Selected Answer: A
A is a better answer. D is vague and not necessarily true.
upvoted 2 times
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goodforme
1 year, 1 month ago
Selected Answer: A
Use of scenario analysis for physical risks is significantly different from transition risk scenario planning in multiple ways. However, a second important difference is that, because the climate system responds on a lag, physical impacts until about 2050 are largely “baked in” by current emissions, so emissions trajectories do not matter on the timescale of the next few decades, which is what the majority of policymakers, firms, and investors limit themselves to (Four Twenty Seven, 2019).
upvoted 4 times
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C (25%)
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