Chapter 3 analyzes the diverse and interconnected risks that climate change poses to multinational corporations. It distinguishes among four primary risk categories: physical, transition, reputational, and litigation. Physical risk stems from climate-related disasters and long-term environmental degradation that disrupt operations and supply chains. Transition risk arises from shifting policies, technologies, and market preferences as economies decarbonize. Reputational risk emerges when stakeholders judge firms’ climate performance, while litigation risk reflects growing legal accountability for environmental damage and disclosure failures. The chapter also highlights the indirect effects of climate change on human health, macroeconomic stability, and social and political conditions in host countries. These cascading impacts amplify uncertainty and reshape global business environments. Together, the discussion situates climate change as a multidimensional systemic risk, establishing the analytical foundation for understanding firms’ adaptive and strategic responses in subsequent chapters.