Extreme weather events are already affecting 62% of cities, states, and regions across 80 countries, according to CDP. Hazards such as extreme heat, urban flooding, and drought are expected to become more severe or frequent, posing risks to financial and insurance activities. Subnational governments report an investment gap of at least $34 billion for climate adaptation projects, with budget constraints limiting their ability to address these challenges. Businesses face reduced production capacity and asset impairment, while governments and regulators are urged to strengthen financial oversight to mitigate economy-wide exposure to climate risks.