Transition risks, including macroeconomic, business, and geopolitical risks, are managed through our 'Enterprise risk management (ERM) framework', supported by dedicated teams. This framework provides a high-level, principle-based structure for addressing all risks to which Ørsted may be exposed. The ERM framework sets the standards for individual risk frameworks across the organisation, ensuring that risks are identified and managed in line with the appetite for risk.

Complementing the ERM framework is the double materiality assessment (DMA), which serves as both an assessment methodology and a focused lens for driving sustainability-related matters. Risks are assessed on an ongoing basis as part of our day-to-day business. The derived insights, including the DMA outcomes, are synthesised to provide a comprehensive view of sustainability-related risks and opportunities, ensuring alignment with our strategy and business model.

We assess physical risks from two perspectives: design safeguards and business case impacts. The design safeguard evaluation ensures the structural integrity and resilience of assets against climate hazards using region-specific data. Our analysis focuses on offshore, onshore, and bioenergy assets that have reached final investment decision, representing critical components of our portfolio.

The business case impact assessment is conducted at a high-resolution, asset-by-asset level under the SSP5-8.5 worst-case scenario. This conservative approach ensures resilience measures address severe climate risks and protect long-term operational and financial stability. The scope includes offshore and onshore assets currently generating across our operating markets, representing the majority of our climate risk exposure.

Our physical climate risk assessment analyses data based on the remaining operational lifetimes of our assets, which extend up to 35 years. This period is considered medium term in climate projections, as significant climate changes are not typically observed in the short term. The long-term horizon, defined as 2060 onwards, is not applicable under our current methodology, as all existing assets are scheduled for decommissioning before that time.