Climate risk assessment is the structured process of identifying, quantifying, and prioritising the physical and transition risks that climate change poses to an asset, portfolio, or institution. Physical risk assessment models exposure to acute events such as floods and storms alongside chronic shifts such as sea-level rise and heat stress, while transition risk assessment evaluates exposure to policy, technology, and market shifts away from carbon-intensive activity. It draws on climate modelling outputs to translate physical hazard projections into financial or operational impact estimates, and is increasingly required under disclosure frameworks such as TCFD. Results feed into climate finance decisions, capital allocation, and regulatory reporting.