An asset is categorized as stranded when it falls victim to premature or unanticipated write-downs, devaluations or liability conversions. This concept is commonly referred to in climate discussions as policy and private sector trends are heading for the premature devaluations of oil and gas equipment, reserves and equity.
Companies who do not recognize and address their linear risks are also vulnerable to stranded assets. All industries are susceptible to linear risk and therefore are at risk of stranded assets. Stranded asset risk is a function of industry, position in the supply chain, geography and others.