Climate-related operational risks pose significant threats to financial and economic systems, particularly as economies transition toward low-carbon models. The timing and pace of this transition create substantial uncertainties, especially for carbon-intensive firms that must balance profitability with decarbonization goals. Vulnerabilities extend through interconnected global supply chains where disruptions propagate indirectly, amplifying operational and systemic risks across multiple tiers.
Financial markets increasingly transmit climate-related risks through asset prices, volatility, and liquidity shocks, potentially triggering market instability through supply chain relationships. This special issue addresses the gap in understanding how climate and environmental risks propagate through financial and economic systems, seeking contributions that employ robust stochastic optimization, machine learning, and advanced forecasting methods to inform portfolio allocation and risk management decisions in the face of evolving climate regulations and transition uncertainties.