The inspiration for this post comes from a couple of reports from the Institute and Faculty of Actuaries. [1] and also [2] about how climate change policy has often failed to evaluate climate risks adequately.
What exactly do actuaries do? They are specialists in risk assessment. They work for insurance companies and other companies that need to plan for uncertain futures – as do we all to some extent. Planning for the future means assessing risk according to the likelihood and potential impacts. Then when the impacts are serious and the likelihood greater than we would prefer we can take steps to reduce the risk (i.e. mitigate) or, at least in some cases, prepare for the impacts (adapt).
Climate Change is a difficult area for risk assessment for several reasons. Firstly, although we have models for how our climate will change in response to our greenhouse gas emissions, they are tested only under conditions where we have sufficient data (historical or geological) and we have to consider scenarios that come outside the boundaries of those conditions. On top of that, the assumptions for greenhouse gas emissions that we feed into our models are uncertain because these are future scenarios and we do not know the future. For example, it is not safe to assume that countries will meet their emissions targets. From recent history we know that they often miss [4].
We do have geological evidence of CO2 levels in the atmosphere higher than current levels but that was 20 million years ago and we have limited data as to what it was like to live in those times. Impacts can be counter intuitive. For example during the Azolla event, 49 million years ago, high greenhouse gas concentrations triggered algal blooms of the Azolla fern leading to a drop in CO2 concentrations, global cooling and ‘icehouse’ earth.
The current CO2 concentration is a little above 400ppm. Co2 levels have been no higher for the last 20 million years.
We are pretty sure that the impacts of climate change could be catastrophic for growing crops to eat and even for keeping our feet and bed-linen dry due to rising sea levels. But there is a strong temptation to ignore unattractive future scenarios which may never happen. Perhaps we think ‘we will cross that bridge when we come to it’ or even ‘it does not matter because I will be dead by then’ – but what about your children or grandchildren or if you do not have any, what about the rest of the human race?
I was somewhat shocked to read in the report from the actuaries that climate policies are often based on scenarios that simply ignore cases where likelihood is uncertain. “… widely discussed carbon budgets only give a 50% (heads or tails) or less chance of limiting global warming to 1.5°C and assume no surprises such as tipping points, which is unrealistic” and “Rather than take the view that we shouldn't say there is an iceberg until we are confident there is one, we should instead say: 'There may be an iceberg, we should steer well clear or reduce our speed' [1].
NB. We are already perilously close to the 1.5°C limit [5].
The report [1] proposes considering risks which are plausible, regardless of the difficulty in evaluating likelihood and impacts precisely “Excluding risks due to uncertainty breaches the precautionary principles — a best estimate is better than no estimate at all” and “even where evidence is not available, we should explore plausible outcomes and take steps to manage the risk, “
There is a table of principles for a resilient approach. (table 1: summary of the Resiience principles’ This includes:
- Prioritise Earth system health over short-term economic metrics.
- Assess tail risks [less likely cases] and combinations of risks
- Use the latest science [ and do not wait for the IPCC to catch up]
- Reward risk identification and communication even if unlikely, to mitigate scientific reticence and consensus
- Consider exponential risks, the potential for unprecedented threshold events and the impact of tipping points
The other report I have been looking at considers the insurance sector specifically.
“Insurance leaders have unequivocally stated that if climate change raises average temperatures to 4˚C above pre-industrial levels most assets will be uninsurable.” [2].
Already in the UK, insurance has become unaffordable for some because climate change is driving more frequent and severe weather events, typically flooding. In 2016, the UK government launched the Flood Re scheme which was meant as a temporary bridge to keep home owners insured while flood resilience was implemented but the cost of this has risen alarmingly [3].
So why can we not trust our governments to follow these principles, even though they are eminently sensible (at least seem sensible to me). Is it ignorance? or recklessness? I suggest it is mainly fear of how we, the electorate will respond. However, well-meaning their proposals, there is a logic to restricting their policies to those which they are sure we will find acceptable, because after we have voted them out they can do even less to protect us.
So, do not miss an opportunity to tell your representatives that you understand the risks of climate change and you are prepared to make changes in your lifestyle, if necessary. Reassure them that even if we grumble they can trust us not to shoot the messenger.
References
[1] Planetary Solvency: finding our balance with nature (www.actuaries.org.uk)
[2] Emperor’s New Climate Scenarios – a warning for financial services (www.actuaries.org.uk)
[3] Climate change is becoming an insurance crisis (PreventionWeb, October 2025)
[4] ‘Will Major GHG Emitters Meet Their Climate Goals?’ (Statista.comm Nov 2025)
[5] Indicators of Global Warming (Met Office dashboard)
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