Environmental finance is gaining increasing importance as a multidisciplinary research area addressing the impacts of climate change-related economic activities within the financial system and how these impacts are managed. This study examines environmental finance within the framework of the structural risk transformation created by climate change in the financial system. Forward-looking, uncertain, and nonlinear climate risks highlight the limitations of traditional risk measurement and pricing approaches, transforming the dynamics of risk identification and sharing in banking, capital markets, and insurance. In this context, environmental finance offers an analytical field that focuses not so much on which instruments are used to finance investments, but rather on how uncertainties and potential losses are undertaken within the financial system through which institutional structures. Green bonds and green loans are considered as structures that reveal how risk is distributed and transferred within the financial system. Insurance and reinsurance systems are among the key components determining the functioning of this distribution. The insurance sector, through the transformation of its traditional role focused on damage compensation, is gaining an active position in guiding financial behavior through risk measurement, management, and contract design. Parametric and index-based insurance applications constitute a significant dimension of this transformation, offering new areas of evaluation around design quality, data infrastructure, and trust. The key finding within this framework is that the effectiveness of environmental finance is closely related to institutional capacity and risk management adequacy, rather than product diversity. This assessment aims to position environmental finance not as a normative policy area, but within an analytical framework that explains the financial system's capacity to assume and share risk.