Climate change poses a significant challenge in different areas of finance. Read the three articles that you can find below and provide a written report answering the questions below. You can (and you probably should) support your answers by researching and reading additional articles and materials on the topic.

1. Analyse the potential ripple effects on the Australian financial system if climate change significantly affects Australian property values.

a. What might be the cascading effects on sectors like banking, real state, and construction? What could these industries do to mitigate the risk?

b. Considering the warnings about changes in property values and potential relocations of communities, discuss the implications for investors and financial institutions holding assets in the regions most affected by bushfires, floods, and other extreme weather events.

2. Analyse the effects of climate change on the insurance and re-insurance sector in Australia.

a. How do natural disasters and the escalating threats of climate change pose risks to the insurance and reinsurance sectors? Discuss the potential strategies these sectors could adopt to mitigate these risks.

b. Home insurance premiums are on the rise, which is, at least in part, attributable to climate-related risks and higher building costs. Discuss the broader economic implications of such increase for Australian households.

c. Discuss the potential financial impacts for the Commonwealth government of Australia if a significant number of households opt for not getting an insurance due to the rising insurance premiums. How might this change the dynamics of financial support systems in the aftermath of a disaster?

3. Evaluate how climate change may also have consequences on Australias monetary policy and the cost of borrowing for the Commonwealth government.

a. How might the increasing unpredictability of climate change events impact the RBAs ability to set monetary policies? What are the long-term implications for economies that rely heavily on these policies for stability?

b. Do you believe that climate change risk could affect the credit rating of Australia? Explain the potential impact that an increase of extreme weather events could have for the Commonwealth government.

c. Do you believe the Australian government is doing enough to mitigate climate change risk considering the high exposure of Australia to extreme weather events? What may be behind the action (or lack of it) of the Australian government to tackle the issue?