When it comes to investing, people generally think about risks through a backward-looking lens: historic security price performance and volatility, liquidity (ability to sell without affecting price), or traditional market risks like inflation and interest rate movements. But “there are new risks that investors need to consider,” says John Cook, senior vice president and portfolio manager for Mackenzie’s Greenchip Team. “Climate change poses both physical and transition risks to assets, as does the availability of resources that companies need to operate. The idea of risk management needs to adjust to these new realities.”
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