Transition risk is the financial risk created when an economy shifts toward lower-carbon rules, technologies, and business models. The risk comes from policy changes, new market expectations, and operational changes inside companies that must adapt their products, supply chains, or reporting.
For cyber security teams, transition risk matters because major business changes often reshape systems and controls. New reporting pipelines, cloud migrations, vendor changes, or compliance tooling can expose weak access control, poor logging, and misconfigured data flows. Attackers may take advantage of rushed transitions, while defenders reduce exposure with phased rollouts, risk assessments, and tight change management. In finance, lenders and insurers also watch transition risk when judging whether a firm can absorb the cost of adapting without becoming more fragile.