Why climate change debate must focus on risk

🔥 Climate risks are no longer abstract—they’re disrupting businesses, communities, and economies right now. The World Economic Forum’s 2024 report, "The Cost of Inaction: A CEO Guide to Navigating Climate Risk", delivers a sobering message: ignoring climate risks isn’t just irresponsible—it’s economically devastating. 🌡️ Key insights from the report: 💥 Climate-related disasters have caused $3.6 trillion in damages since 2000, exposing critical vulnerabilities in supply chains and infrastructure. 📉 Physical risks could put 5-25% of EBITDA at risk for some sectors by 2050 under a 3°C warming trajectory. 💸 Transition risks, like carbon pricing and changing regulations, could impact 50% of EBITDA in energy-intensive industries by 2030. 🌱 Every $1 invested in climate adaptation yields $2-$19 in avoided costs, while green markets are projected to grow from $5 trillion in 2024 to $14 trillion by 2030. 💡 My reflections: 🔄 Resilience isn’t enough anymore. Too often, we focus on simply "weathering the storm" of climate risk. But true leadership is about rebuilding something better—rethinking markets, redesigning business models, and creating solutions that lead entire industries forward. 🌍 Supply chain fragility is the Achilles’ heel of the global economy. A single extreme weather event can cascade across operations, grinding everything to a halt. Climate-resilient supply chains can’t just be about survival—they must be radically adaptive, decentralized, and built to thrive under disruption. 📊 Climate risk is fundamentally redefining the concept of value. Businesses stuck chasing quarterly earnings are missing the bigger picture. In a world of rising costs and irreversible climate impacts, long-term value will belong to those who embed sustainability, resilience, and equity into their strategies. The time for cautious, incremental steps has passed. How are we using this moment to transform the way we work, innovate, and lead? #ClimateAction #Sustainability #Resilience #Leadership #Innovation

𝗜𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲 𝘄𝗶𝗹𝗹 𝗯𝗲 𝘁𝗵𝗲 𝗳𝗶𝗿𝘀𝘁 𝘀𝘆𝘀𝘁𝗲𝗺 𝘁𝗼 𝗰𝗿𝗮𝗰𝗸 𝘂𝗻𝗱𝗲𝗿 𝗰𝗹𝗶𝗺𝗮𝘁𝗲 𝗿𝗶𝘀𝗸 — 𝗮𝗻𝗱 𝗶𝘁 𝘀𝗵𝗼𝘂𝗹𝗱 𝗰𝗼𝗻𝗰𝗲𝗿𝗻 𝘂𝘀 𝗮𝗹𝗹. Natural disasters caused $𝟯𝟲𝟴 𝗯𝗶𝗹𝗹𝗶𝗼𝗻 in global economic losses last year, according to Aon — the ninth year in a row losses topped $300 billion. Only 𝟰𝟬% of those losses were insured. The protection gap is widening. As insurers retreat from high-risk regions, public safety nets — often overstretched — are stepping in. More households, businesses, and governments are being left to absorb risks they cannot afford. This isn’t just about insurance anymore. When insurance breaks down, so does credit. When credit dries up, property values fall, costs rise, and resilience weakens — just when it’s needed most. @Günther Thallinger 𝗳𝗿𝗼𝗺 𝗔𝗹𝗹𝗶𝗮𝗻𝘇 put it starkly: “𝘛𝘩𝘦𝘳𝘦 𝘪𝘴 𝘯𝘰 𝘤𝘢𝘱𝘪𝘵𝘢𝘭𝘪𝘴𝘮 𝘸𝘪𝘵𝘩𝘰𝘶𝘵 𝘧𝘶𝘯𝘤𝘵𝘪𝘰𝘯𝘪𝘯𝘨 𝘧𝘪𝘯𝘢𝘯𝘤𝘪𝘢𝘭 𝘴𝘦𝘳𝘷𝘪𝘤𝘦𝘴. 𝘈𝘯𝘥 𝘵𝘩𝘦𝘳𝘦 𝘢𝘳𝘦 𝘯𝘰 𝘧𝘪𝘯𝘢𝘯𝘤𝘪𝘢𝘭 𝘴𝘦𝘳𝘷𝘪𝘤𝘦𝘴 𝘸𝘪𝘵𝘩𝘰𝘶𝘵 𝘵𝘩𝘦 𝘢𝘣𝘪𝘭𝘪𝘵𝘺 𝘵𝘰 𝘱𝘳𝘪𝘤𝘦 𝘢𝘯𝘥 𝘮𝘢𝘯𝘢𝘨𝘦 𝘤𝘭𝘪𝘮𝘢𝘵𝘦 𝘳𝘪𝘴𝘬.” The Institute and Faculty of Actuaries (IFoA) project a 𝟱𝟬% 𝗰𝗼𝗹𝗹𝗮𝗽𝘀𝗲 𝗶𝗻 𝗴𝗹𝗼𝗯𝗮𝗹 𝗚𝗗𝗣 𝘄𝗶𝘁𝗵𝗶𝗻 𝗱𝗲𝗰𝗮𝗱𝗲𝘀 if climate risk is not properly managed. Climate risk is no longer a future scenario. It is here. It is compounding. And it is reshaping our economy in real time. There are positive signs: ➤ Hannover Re and Swiss Re are restricting fossil fuel underwriting. ➤ Parametric insurance models are speeding up disaster recovery. ➤ EIOPA and the European Central Bank are pushing for public-private risk sharing. These are encouraging — but early signs. 𝗠𝘆 𝘁𝗮𝗸𝗲: Climate risk is already disrupting the systems we rely on: insurance, credit, asset valuation, and public finances. Systems change is needed. The insurance sector holds a unique vantage point — but leadership now demands rethinking long-held assumptions about risk, resilience, and responsibility. The sector has an opportunity to lead: ➤ Embed forward-looking climate risk into underwriting ➤ Signal future exposures more transparently ➤ Drive transition finance to accelerate decarbonisation ➤ Redirect investment into adaptation ➤ Co-design shared risk pools and resilience bonds Collaboration between insurers, financiers, and governments is no longer optional — it is the foundation for economic stability in a climate-disrupted world. The sooner we align risk pricing with physical reality, the stronger our chances of building a more resilient economy for the future. #climaterisk #insurance #resilience #finance #sustainability #systemicrisk #adaptation –––––––––– For updates on sustainability, climate, and innovation, follow me on LinkedIn: @Scott Kelly

👉 Are we using the wrong tools to assess climate risk? A new expert-led assessment, drawing on the judgment of 60+ climate scientists, says that #climatechange introduces forms of risk that exceed the design assumptions of existing economic and financial frameworks. Here’s what that means in practice ⬇️ 🔹 Climate damages are structural, they reshape economies: where people live, what can be produced, how infrastructure functions, and which regions remain viable. 🔹 Extremes drive real-world risk: what actually destabilises societies and markets are heatwaves, floods, droughts, grid failures, food shocks. It’s the tails of the distribution that matter. 🔹 GDP misses mortality, inequality, displacement, ecosystem loss, and can even rise after disasters due to reconstruction. This creates a dangerous illusion of resilience. 🔹 Repeated shocks erode recovery capacity and propagate across supply chains, finance, migration, and geopolitics. 🔹 Beyond ~2°C, uncertainty widens sharply. Confidence in precise damage estimates falls even as consequences grow. 🔹 Tipping points expose the limits of economic modelling: At higher warming levels, model outputs can appear precise while resting on assumptions that no longer hold. At the same time, many models also underestimate positive tipping points in clean energy and innovation. The goal is to build resilience under deep uncertainty. For treasuries, central banks, regulators, and long-horizon investors, this means recalibrating governance toward: ➡️ precaution ➡️ robustness ➡️ transparency Because avoiding irreversible outcomes is always cheaper than trying to price them after the fact. read the report "Recalibrating Climate Risk" here 👇 https://lnkd.in/dx8wmRZ4 Green Futures Solutions (University of Exeter) Carbon Tracker @aurora trust

Climate Risk = Business Risk 🌍 As climate impacts intensify, the connection between environmental risk and business risk is becoming more direct and more difficult to ignore. These risks are no longer theoretical. They are affecting assets, operations, and financial planning across industries and regions. Severe weather events such as storms and floods are damaging infrastructure, halting operations, and increasing the costs of repair, insurance, and downtime. Heatwaves are lowering workforce productivity and raising the incidence of heat related health issues, particularly in sectors dependent on physical labor or lacking adequate climate control systems. Droughts are limiting access to essential inputs like water, disrupting industrial processes and increasing operational costs for water intensive sectors. Sea level rise is placing facilities, warehouses, and offices in coastal areas at risk of flooding, requiring significant investments in adaptation or relocation. Wildfires are interrupting transportation networks and regional supply chains, resulting in logistical delays, inventory disruptions, and increased delivery costs. Increased climate variability is making business planning more uncertain. Fluctuating weather patterns complicate forecasts, investment decisions, and long term strategy development. Energy infrastructure is also affected. Extreme temperatures and natural disasters are disrupting electricity and fuel supply, creating additional risks and increasing energy expenditures. Insurance markets are responding. Coverage in climate exposed areas is becoming more expensive or unavailable, leaving businesses with greater financial exposure and limited risk transfer options. These risks highlight the need for companies to integrate climate considerations into core decision making processes, from operations and procurement to finance and long term strategy. Addressing climate impacts is not a secondary issue. It is essential to maintaining competitiveness and resilience. #sustainability #sustainable #business #esg #risk

An important and timely intervention in the UK as climate experts organise a National Emergency Briefing for more than 1,000 people including politicans, business leaders, senior civil servants and civic leaders to set out the scale of the climate and biodiversity crises and to reset the national conversation on these issues, especially in the face of growing misinformation. Nine experts gave stark assessments of the scale of the changes needed to adapt the country to the rapidly changing climate and ecological situation, and to potentially stave off the worst potential outcomes. The briefing examined critical issues such as food security and inequality, and scientific leaders from security, health, and finance sectors warned that climate and nature breakdown represent compounding, systemic risks, the kind that can fracture markets and exceed the resilience of states. “We are facing a national emergency not only because the climate is changing, but because the living systems that protect the climate are breaking down. This isn’t about choosing between the economy and the environment. It’s about recognising that the economy is embedded within the environment, and that the health of the nation depends on the living systems that sustain us.” Nathalie Seddon, Professor of biodiversity at the University of Oxford. It is vital that these conversations happen. Climate targets are not abstract numbers on a page, they are the difference between stable societies and escalating disruption. Without an honest, shared understanding of the risks, the scale of action required is easy to underestimate. Grounding the discussion in evidence turns distant targets into real decisions about how we safeguard society and the environment. https://lnkd.in/e3CXawT8 National Emergency Briefing

Superb report published today from Green Futures Solutions (University of Exeter) on the inadequacy of current corporate and financial risk models in accommodating climate risks. At its most fundamental, I see the failure of these risk models as the core assumption that our systems of the future - whilst dynamic - will retain the same basic structures, functions and features as they do today. The assumption that our social, economic, and environmental reality will march onward into a flat, linear, tabula rasa which extends infinitely into the future. Tipping points science shows us that this isn't true. With increased temperatures and continued ecosystem degradation, tipping points will be reached, and system collapses will follow. And with system collapses come cascade failures, and often unforeseeable (and catastrophic) consequences. These consequences and radical uncertainties have to be - as far as they can be - factored into a new generation of risk governance approaches, fit for the future that lies before us. In the Ecologi | B Corp™ team, we're spending a lot of time thinking about risk management strategies as a core component of - and motivator for - corporate climate action. On our project assessments, we use sensitive risk models which take into account extreme climate scenarios and the significant uncertainty that comes with them - so that we can bake-in precaution, prevention and resilience from the start. Risk assessment and management has become a huge part of the work we do, both internally and for our clients. It's not lip service to say that climate risk management is business critical. Climate change impacts are arguably the most foundational, most all-encompassing of all risk factors affecting businesses today. And many current risk approaches in use by businesses and investors just aren't up to the task. Read the report 👉 https://lnkd.in/evipkQNX Good write-up in The Guardian 👉 https://lnkd.in/eXPeYjt5 📸 : John Towner via Unsplash

States and financial bodies using modelling that ignores shocks from extreme weather and climate tipping points, writes Damian Carrington. https://lnkd.in/et-3yWge Flawed economic models mean the accelerating impact of the #climatecrisis could lead to a global financial crash, experts warn. Recovery would be far harder than after the 2008 financial crash, they said, as “we can’t bail out the Earth like we did the banks”. As the world speeds towards 2C of global heating, the risks of extreme weather disasters and climate #tippingpoints are increasing fast. But current economic models used by governments and financial institutions entirely miss such shocks, the researchers said, instead forecasting that steady economic growth will be slowed only by gradually rising average temperatures. This is because the models assume the future will behave like the past, despite the burning of #fossilfuels pushing the climate system into uncharted territory. Tipping points, such as the collapse of critical Atlantic currents or the Greenland ice sheet, would have global consequences for society. Some are thought to be at, or very close to, their tipping points but the timing is difficult to predict. Combined #extremeweather disasters could wipe out national economies, the researchers, from the University of Exeter and financial thinktank Carbon Tracker, said. Their report concludes governments, regulators and financial managers must pay far more attention to these high impact but lower likelihood #risks, because avoiding irreversible outcomes by cutting carbon #emissions is far cheaper than trying to cope with them. “We’re not dealing with manageable economic adjustments,” said Dr Jesse F Abrams, at the University of Exeter. “The climate scientists we surveyed were unambiguous: current economic models can’t capture what matters most – the cascading failures and compounding shocks that define climate risk in a warmer world – and could undermine the very foundations of economic growth.” “For financial institutions and policymakers, it’s a fundamental misreading of the risks we face,” he said. “We are thinking about something like a 2008 [crash], but one we can’t recover from as well. Once we have ecosystem breakdown or #climatebreakdown, we can’t bail out the Earth like we did the banks.” Mark Campanale, CEO of Carbon Tracker, said: “The net result of flawed economic advice is widespread complacency amongst investors and policymakers. There’s a tendency in certain government departments to trivialise the impacts of climate on the economy so as to avoid making difficult choices today. This is a big problem – the consequences of delay are catastrophic.” Read more below. Read the report here: https://lnkd.in/erv73pNh

The climate conversation has permanently changed. We’re no longer just talking about the energy transition, carbon emissions, or regulatory compliance. Today, the conversation centers on preventing catastrophic loss. Over the last two decades, climate investment has evolved through distinct phases: 1️⃣ CleanTech 1.0 (2005–2015): Powering the energy transition with renewables. 2️⃣ ClimateTech 2.0 (2015–2025): Reducing emissions and focusing on sustainability. 3️⃣ ClimateRisk 3.0 (Now): Protecting individuals, businesses, and infrastructure from economic and physical loss. Companies that ignore these risks face the very real possibility of eroded enterprise value. This is beyond physical impacts from hurricanes and wildfires—we’re talking about billions of dollars in lost revenue, asset devaluation, and unmanageable liabilities that could cripple companies for years to come: 💠 Energy Instability: Weather-related outages account for 80% of major U.S. power failures, with disasters costing $120B+ annually. On top of this, significant price spikes are leading to energy costs crushing margins for customers. 💠 Infrastructure Vulnerability: First order effects from asset damage will drive up insurance premiums and erode asset value—U.S. home values could drop $1.5T in 30 years. Second order effects from investor skepticism could increase the cost of capital—annual investment in infrastructure could reach $6.9T by 2030 for companies to stay aligned with shareholder goals. 💠 Enterprise Value at Risk: Third-order effects from asset damage may reshape entire markets. Prolonged vulnerability could spur industry consolidation & exits. Evolving labor demands, along with the risk of stranded assets, threaten to upend traditional valuations. Supply chain disruptions alone may cause $25T in net losses by mid-century. 💠 Insurance Fallout: Already, entire regions are being deemed “uninsurable,” with insurers like State Farm & Allstate exiting high-risk markets. In 2024 alone, climate losses exceeded $400B, with a growing coverage gap of >60% that was not covered by insurance. With a targeted focus on both Climate x Insurance, Equal Ventures has had a unique opportunity to build a deep thesis in this space—investing in companies that mitigate climate-driven operational risks, create financial resiliency in volatile markets, and redefine enterprise security by building strategies that secure both physical and digital assets. Companies like: Stand, Odyssey Energy Solutions, Texture, Shadow Power, David Energy 💡 Check out our latest blog post - link in the comments below. Rick Zullo Adam Chadroff Sophia Dodd

The 2025 National Security Strategy nods to resilient infrastructure and energy production — but not to climate risk as a strategic threat. Physical climate hazards — extreme heat, flooding, wildfires, coastal-erosion, water stress — are entirely missing from the document. 👉The strategy https://lnkd.in/evHPrBCs That absence matters. Because while the 2025 NSS sidelines climate, the financial damage from climate-exacerbated disasters is already enormous. According to a 2024 analysis by the staff of the United States Congress Joint Economic Committee (JEC), flooding alone costs the U.S. between US$179.8 billion and US$496.0 billion per year. Long-term research by the Stanford Institute for Economic Policy Research found that, over the past three decades, intensifying storms and precipitation — likely driven by climate change — contributed roughly one-third of all U.S. flood damages, amounting to about US$75 billion in flood damage during that period. Major climate disasters and extreme-weather events have recurring direct costs that ripple across infrastructure, homes, businesses and public services — not to mention long-term losses in property values, insurance premiums, community disruption, and long-term resilience buildup. In short: ignoring climate risk doesn’t make the bill go away — it just ensures a bigger tab later. If floods, storms, wildfires, sea-level rise, and other climate-driven disasters continue to rack up hundreds of billions per year in damage, the cost to taxpayers, homeowners, businesses, and national infrastructure will only grow. If we want a secure future — not just a stable present — climate risk needs to be brought out of the footnotes and put front-and-center in national security planning. #NationalSecurity #AmericaFirst #Resilience United States Senate U.S. House of Representatives National Governors Association

Climate Risk is National Security Risk I’m proud to be associated with the recent open letter from the Center for Strategic Risks. Reports that question the severity or attribution of climate change impacts—often a hallmark of climate disinformation—miss the core issue for national security: risk. In 14 years examining climate risk inside the Pentagon, I saw firsthand how climate impacts already undermine readiness—destroying infrastructure, disrupting training, endangering service members, and accelerating equipment obsolescence. Security professionals don’t wait for 100% certainty. They plan for risk. To emphasize uncertainty as a reason for inaction isn’t caution—it’s negligence. And the costs of inaction go beyond the military. By stepping back from climate diplomacy and clean energy investment, the U.S. cedes economic and diplomatic ground to China—handing our competitor strategic advantage and influence. Climate change is already here, already a security threat. Our responsibility is clear: anticipate, prepare, and build resilience. Waiting for certainty isn’t a strategy—it’s a gamble with national security. Paul Roege, Laura Smith Morton, John Conger, Dennis McGinn, Sherri Goodman, Caroline Baxter, Andrew Mayock, John Nagl, Mark "Puck" Mykleby, Erin Sikorsky, Lincoln Bloomfield Jr., Patrick Doherty, Al Puchala, Katherine Hammack, Amanda R Simpson, Brendan Owens, Dee Siegel,Ernest J. MonizWilliam F. Wechsler,Iris Ferguson, Mark T. Esper, Ph.D.,Owen Barwell, ACMA, Peter Newell, Robert H. Edwards Jr., Jigar Shah, Sharon Burke, David T. Danielson, #climatesecurity, #nationalsecurity, #climatechange, #climatecrisis security.https://https://lnkd.in/eRQZWKYW