Impact of climate risk on long-term core activity management in the power sector
Impact of climate risk on long-term core activity management in the power sector

Summary/Abstract: The global economy faces the challenges of climate change that generates the climate risk, whichessentially affects the operational activity of power companies. The power sector is both, one of themost important greenhouse gases emitters, and an industry especially exposed to widely perceivedclimate risk. Changes in the natural environment cause negative impacts on the energy infrastructure(physical risk), while regulatory changes and society sentiments (transition risk) reshape the conditionsof operational profitability of power companies. These phenomena, currently accelerating changesin the global economy, persuaded the authors to undertake a study on necessary changes in thecore activities of power companies, which should secure the resilience of their profits in an uncertainfuture. The authors performed a comprehensive study of literature concerning climate risk exposurein the power sector by researching operational adjustments made by leading power companies inthe green transformation process. To meet the abovementioned objectives of the article, the authorspresent the results of their research in the part of the article that discusses the recommendations forthe necessary changes of the core activities of power companies. They intend to identify universalsolutions that can be applied by power companies operating in the globalized economy. This requiresa long-term approach to the process of re-designing the operational activities of power companies, which would secure physical assets responsible for the continuity of their operations, and hedgefuture profits against transition risk.

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