Climate transition risk is expected to emerge from a disorderly transition to a low-carbon economy. This is defined as a situation in which climate policies and regulations are introduced late and suddenly, or technological shocks occur, that negatively affect fossil fuel and high-carbon firms' performance, and thus the value of their financial contracts. In a disorderly transition, "carbon stranded assets" could materialize for both firms and investors, potentially leading to large asset price volatility (negative for high-carbon, and positive for low-carbon firms). In this condition, investors cannot fully anticipate shocks on firms' performance and assets. Portfolio rebalancing and hedging could not be fully possible if the economic and market structure is prevalently high-carbon. Thus, investors who are exposed to fossil fuel and high carbon firms will incur losses. Losses from carbon stranded assets could then reverberate in the financial network, with implications on financial stability at the individual and systemic level.