‘Planetary Solvency’ Needed to Assess Ecological Risk  

Actuaries have called for policymakers to use more realistic climate risk assessments, including the ‘risk of ruin’: the point past which global society can no longer adapt to climate change. In a report, the Institute and Faculty of Actuaries (IFoA) and the University of Exeter put forward the case for using financial services risk management to evaluate and communicate climate risk. It advocates for ‘worst-case’ scenario thinking around climate change. It also surveys the latest knowledge about extreme climate risks and outlines how we can best use actuarial thinking to inform policymakers. It introduces the idea of ‘planetary solvency’ framework, described as an assessment of the different ecological threats, including those beyond climate change, to determine the risk of planetary ruin. “This report underlines just how overwhelming the scientific evidence is now: helping politicians to understand that climate change presents very serious global risks, to life, health and wealth, demanding an urgent global response from policymakers to avoid the worst impacts,” said Lord Stern, Chair of the London School of Economics’ Grantham Research Institute. “We are already experiencing the impacts of climate change and these will worsen, impacting the basic elements of life for people around the world – access to water, food production, health and the environment. Unfortunately, the current pace of progress is not nearly rapid enough and if we fail to curb the impact of climate change, it could damage society and the global economy more than the World Wars.”   

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