Key findings

The report stresses that societies and economies depend on non-substitutable ecosystem services such as food, water, energy and raw materials. Climate change and nature loss, driven by human activity, are destabilising these systems, with impacts including fires, floods, droughts, heatwaves, crop risks and sea-level rise. Multiple climate tipping points may cascade, including Greenland ice melt, Amazon dieback, coral reef collapse and AMOC disruption. Climate impacts are materialising faster than models predicted, with risks of mass mortality, forced migration and geopolitical tension.

The report warns that policymakers have implicitly accepted far higher levels of risk than understood when agreeing the Paris goals. The last 12-month average temperature has exceeded 1.5°C, and warming is accelerating. Net-zero carbon budgets only provide a 50% probability of meeting 1.5°C and may now be negative. Current approaches to climate and nature risk underestimate tail risks, ignore cascading effects, and assume continued economic growth even in high-warming scenarios.

Recommendations include establishing Planetary Solvency assessments, defining risk limits aligned with planetary boundaries, enhancing governance and transparency, building systemic risk capability and accelerating emissions reduction, nature restoration, adaptation and resilience.

Foreword – the urgent need for risk-infomed policy

The foreword argues that global risk management frameworks fail to capture systemic risks. Historical events such as the global financial crisis demonstrate failures of imagination and misaligned incentives. Current climate risk assessments exclude high-severity scenarios and thus underinform policy. The report proposes applying actuaries’ risk-management techniques to planetary risks to help policymakers avoid the societal “risk of ruin”.

Ifoa presidential introduction

The IFoA highlights that current global goals have a low chance of success and that severe societal and economic disruption is increasingly plausible. The report expands the Planetary Solvency concept to assess whether the Earth system can continue to provide essential services. It notes that net-zero pathways rely on assumptions that underestimate systemic risks and tipping points. A policy-led shift is required to return within safe operating boundaries. A Planetary Solvency assessment should accompany global governance processes such as the Pact for the Future to provide clear, risk-focused guidance.

1. The urgent need for global risk management

Human progress has taken place within the climatic stability of the Holocene, but current activity is pushing the Earth system beyond safe limits. Several planetary boundaries and Earth-system boundaries have already been breached. Existing climate risk assessments underestimate damages by omitting tipping points, extreme events, migration, health effects and conflict risks. Example estimates for GDP impacts by 2100 under current policies range from 2% to 44%, reflecting deep methodological uncertainties. Models typically exclude 87% of the economy from analysis and assume no recession is possible, leading to understated risks.

2. From financial solvency to planetary solvency

Actuarial tools such as risk identification, measurement, control, financing and monitoring can be applied to planetary risks. A solvent Earth system is one that continues providing essential services. Reverse stress testing can identify conditions that would trigger “planetary insolvency”. Unlike scientific methods, risk management explores plausible worst-case scenarios even when evidence is incomplete. Policymakers must be ecologically and climate-literate to make informed decisions.

3. The resilience principles

The report introduces the RESILIENCE principles as the foundation for realistic global risk assessment. These include setting risk-led limits, prioritising Earth-system health, assessing systemic and non-linear risks, incorporating the latest science, using imaginative tail-risk scenarios, building incentives for risk signalling, educating decision-makers, encouraging cross-disciplinary collaboration and embedding effective governance and transparent reporting.

4. Planetary solvency – illustrative output

The illustrative dashboard shows Severe climate impacts today with a trajectory that is Likely to reach Catastrophic or Extreme levels by 2050. Nature risk is already Severe, with multiple planetary boundaries breached and ecosystem degradation rising. Societal risks include geopolitical tension, fragile states and rising protectionism. Economic risks remain Limited today but could reach Decimation or Catastrophic levels due to compounding climate and nature shocks.

5. Climate risk dashboard and headlines

Temperatures have surpassed 1.5°C on a 12-month basis and warming has accelerated to 0.26°C per decade. Emissions and greenhouse gas levels remain at record highs. Catastrophic (>2°C) warming by 2050 is Highly Likely without immediate action. Tipping points may trigger abrupt and irreversible impacts, including crop losses and multi-metre sea-level rise. The report calls for accelerated emissions reduction, adaptation, nature-positive strategies, updated carbon budgets, systemic risk assessments and consideration of all mitigation options, including greenhouse gas removal.