Our Planet: A Startup With No Business Plan
Planetary Solvency, Part 2
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We live in a world obsessed with risk management. Insurance companies calculate the probability of your house burning down to the decimal point. Banks stress-test their portfolios against economic catastrophes that might happen once in two centuries. Financial institutions operate with a 0.5% tolerance for failure—meaning they're designed to survive all but the most extreme scenarios.
So why are we managing our planet like a startup with no business plan?
A groundbreaking report from the Institute and Faculty of Actuaries, released in January 2025, introduces a concept that should fundamentally change how we think about our relationship with Earth: planetary solvency. Just as a pension fund must remain solvent to pay benefits, our planet must remain "solvent" to continue providing the life-support services that make human civilization possible.
The uncomfortable truth? We're already operating outside acceptable risk parameters.
The Accounting Error of the Century
Here's where things get deeply unsettling. The same actuarial professionals who safeguard trillions in global financial markets have turned their analytical lens toward Earth's systems. Their conclusion reads like a corporate bankruptcy warning: we are systematically underestimating existential risks while overestimating our ability to adapt.
Current climate models, the report argues, are "precisely wrong rather than roughly right." They're like conducting a risk assessment of the Titanic hitting an iceberg while excluding the possibility that the ship could sink, the shortage of lifeboats, or death from hypothermia. The results appear reassuring but are fundamentally dangerous.
This isn't hyperbole—it's methodical analysis. While financial institutions operate with stringent risk appetites, our climate policies essentially flip a coin. Current carbon budgets give us roughly a 50% chance of limiting warming to 1.5°C. Compare that to an insurance company's 0.5% acceptable failure rate, and you begin to understand the magnitude of our risk management failure.
The Domino Effect Nobody Wants to Discuss
The report introduces a chilling concept: cascading tipping points. We're not just facing isolated environmental problems that can be solved independently. We're looking at interconnected systems that can trigger each other in catastrophic ways.
Consider this scenario, backed by current scientific projections: there's a 45% chance that key ocean currents—including the system that drives the Gulf Stream—could collapse as early as 2040. The result? More than half the land currently suitable for growing wheat and corn could become unusable. This isn't science fiction; it's actuarial assessment based on current trajectories.
The Amazon rainforest provides another stark example. Climate change alone might push it past its tipping point at 3.5°C of warming. But factor in ongoing deforestation, and that threshold drops to just 1.5°C—a level we've already reached in the past 12 months.
These aren't separate crises. They're components of a complex system where each failure makes others more likely. The technical term is "systemic risk," and it's exactly what financial regulators spend sleepless nights trying to prevent in banking systems.
The Literacy Crisis in Leadership
Perhaps most troubling is the report's assessment of our decision-makers. Policymakers are "de facto planetary solvency managers," whether they recognize it or not. Yet most lack what the report calls "fundamental climate, ecological and risk literacy."
This isn't about political ideology—it's about competency. You wouldn't let someone manage a pension fund without understanding actuarial science. Yet we routinely place leaders in positions where they make decisions affecting planetary stability without requiring them to understand earth systems science or risk assessment methodologies.
The consequences of this knowledge gap are already visible. Economic models continue to treat energy, food, and raw materials as infinitely substitutable inputs rather than irreplaceable outputs of earth systems. It's like running a business without accounting for your supply chain.
The New Framework: RESILIENCE
The report proposes a comprehensive framework for planetary risk management using the acronym RESILIENCE. Unlike feel-good sustainability initiatives, this approach treats earth system stability as a hard constraint on human activity.
The framework demands we set explicit risk limits—the planetary equivalent of capital requirements for banks. It requires systematic assessment of cascade effects and tipping points. Most importantly, it insists on governance structures that report directly to the highest decision-making authorities, free from short-term political interference.
This isn't about environmental activism; it's about institutional risk management applied at civilizational scale.
The Dashboard Nobody Wants to See
The report includes a "Planetary Solvency Dashboard" that reads like a corporate health check for civilization. The summary is stark: we are already operating outside acceptable risk parameters, with catastrophic impacts likely before 2050.
Climate: severe impacts already occurring, with highly likely catastrophic warming pre-2050. Nature: trending toward severe degradation with catastrophic risks by 2050. Society: moving from current geopolitical tensions toward possible severe fragmentation. Economy: limited impacts now, but 19% GDP loss projected by 2050, with catastrophic impacts possible.
The dashboard doesn't predict immediate collapse, but it shows rapidly escalating systemic risk across all dimensions of human civilization.
What This Means for You
The planetary solvency framework forces us to confront an uncomfortable question: if we're this bad at assessing and managing existential risks at a global scale, what other critical risks are we ignoring in our personal and professional lives?
The report's methodology—identifying what we want to avoid at all costs, then working backward to determine necessary safeguards—applies far beyond climate policy. It's a framework for thinking about any complex system where failure carries unacceptable consequences.
The Path Forward
The authors aren't counseling despair; they're demanding competence. Their call for immediate policy action isn't environmental activism—it's risk management. Just as we don't wait for bank failures to implement capital requirements, we can't wait for civilizational collapse to implement planetary risk management.
The uncomfortable truth about planetary solvency is that we already have the tools and knowledge needed. What we lack is the institutional will to apply rigorous risk management to our most critical systems. We're essentially running Earth Inc. with the risk management standards of a corner store.
The question isn't whether we can afford to implement planetary solvency frameworks. It's whether we can afford not to. Because right now, we're betting our entire civilization on a coin flip—and the odds are getting worse every day.
The actuaries have done their job. They've shown us the numbers. Now it's time for the rest of us to decide whether we're going to manage our planet like the irreplaceable life-support system it is, or continue treating it like a disposable resource we can replace with better technology.
The choice is ours. But according to the math, we're running out of time to make it.
References:
Planetary Solvency – finding our balance with nature
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STUDY MATERIALS
1. Briefing Document
1. Executive Summary
The "Planetary Solvency" report, developed by IFoA and Exeter University, introduces a global risk management framework to address the existential threats posed by climate change and nature degradation. The core concept, "Planetary Solvency," adapts established financial risk management techniques to assess the Earth system's ability to continue supporting human society and economy. The report argues that current global goals and risk assessments significantly underestimate the severity and interconnectedness of these risks, implicitly accepting dangerously high levels of exposure, and leading to a "risk of ruin" or "Planetary Insolvency." It proposes the "RESILIENCE principles" as a guideline for effective civilizational risk management and advocates for independent, high-level risk assessments to inform urgent policy action.
2. Key Findings and Themes
A. The Urgent Need for Global Risk Management and Planetary Solvency
The report asserts that human society and economy are fundamentally dependent on the Earth system, which provides essential resources and regulates the climate. The current trajectory of unmitigated climate change and nature degradation poses an "urgent need for global risk management."
Underestimated Risks: "Unmitigated climate change and nature-driven risks have been hugely underestimated." Climate change impacts are materializing faster and at lower temperatures than previously estimated, with "severity and frequency of extreme events unprecedented and beyond model projections."
Human Security at Risk: These impacts are now a matter of "human security with populations impacted by fires, floods, food system shocks, water insecurity, heat stress and infectious diseases."
Inadequate Paris Agreement Goals: The report contends that "Paris Agreement goals were not informed by realistic risk assessment, they implicitly accept high risk of crossing tipping points." The 1.5°C warming threshold has already been breached over the last 12 months, increasing the risk of triggering multiple climate tipping points.
Limitations of Traditional Risk Assessment: Current climate change risk assessment methodologies "understate economic impact, as they often exclude many of the most severe risks that are expected and do not recognise there is a risk of ruin. They are precisely wrong, rather than being roughly right." They also fail to capture "network effects and interconnections, underestimating cascading, compounding risks."
Defining Planetary Solvency: "Planetary Solvency" is defined as "Managing human activity to minimise the risk of societal disruption from the loss of critical support services from nature." It "assesses the Earth system’s ability to continue supporting us, informed by planetary boundaries, tipping points in the Earth system and other scientific discoveries to assess risks to this foundation – and thus to our society and the economy." An "insolvent planet is one in a state where we have degraded the Earth system to such an extent that we can no longer receive enough of the critical services we rely on to support our society and economy."
Current Approach Failing: The report concludes, "Our current market-led approach to mitigating climate and nature risks is not delivering. There is an increasing risk of severe societal disruption (Planetary Insolvency), as our economic system drives further global warming and nature degradation." For instance, commonly used ‘net zero’ carbon budgets offer only a 50/50 chance of limiting warming to well below 2°C, which is deemed "unreasonable given the risks faced."
B. Adapting Financial Solvency Techniques to Global Risks
The report draws a direct parallel between financial risk management and global environmental challenges, arguing that "policymakers can adapt these risk management techniques and apply them to the global risks we currently face."
Actuarial Expertise: Actuaries, who manage "risk and uncertainty" in multi-trillion dollar markets like pensions and insurance, employ techniques to "minimise the risk of failure in these markets by managing the complex risks these industries face."
Reverse Stress Testing: A core actuarial concept, "reverse stress testing," involves identifying scenarios that would cause "failure (insolvency)" and then taking actions to reduce that risk. This approach asks, "What do we want to avoid?"
Risk Management Control Cycle: The report outlines a five-component risk management control cycle:
Risk identification: Recognizing all threats to objectives and determining risk tolerance.
Risk measurement: Estimating probability and severity.
Risk control: Taking action to reduce probability or limit severity.
Risk financing: Determining the cost and required resources.
Risk monitoring: Regular assessment, adjusting assumptions, and identifying new risks.
Addressing Uncertainty: Actuarial approaches acknowledge uncertainty by asking "not just ‘What is likely?’ but ‘What is possible?’" This includes considering "extremely bad scenarios, often driven by tail risks or a combination of risks, that could ‘break’ an organisation."
Applying to Planetary Goals: The report suggests replacing "the solvency of an insurance company with our shared objectives: those of the Paris Agreement to limit global warming, the Kunming-Montreal biodiversity agreement and the United Nation’s Sustainable Development Goals." The current situation shows "clear risk of insolvency if we do not change course."
C. The RESILIENCE Principles: A Framework for Effective Risk Management
The report introduces the RESILIENCE principles as "a set of guidelines for effective civilisational risk management," designed to make society resilient through effective and realistic global risk management practices.
Risk-led methodology: Set clear risk limits and track trends using a global dashboard. A Planetary Solvency risk appetite would have "a very low appetite for: Climate, nature and societal risks that undermine the ecosystem services upon which life on Earth depends, threatening human prosperity." This includes minimizing the risk of "Crossing Earth system tipping points and triggering tipping cascades," "Habitat loss and species extinctions," and "Breakdown of critical ecosystem services."
Earth system primacy: "Prioritise Earth system health over short-term economic metrics." This aligns with the "SDG wedding cake," which views "economies and societies...as embedded parts of the biosphere."
Systemic risk assessment: Move beyond traditional isolated risk assessments to capture "cascading and compounding risks through various interactions" within the "highly interconnected dynamic complex system" of the Earth, society, and economy.
Imaginative scenarios: "Examine tail risks and uncertainty" by considering "extremely bad scenarios, often driven by tail risks or a combination of risks," even if they cannot be precisely quantified. This involves asking: "How bad can it get?"
Incentives to flag risks: Promote a "realistic risk assessment" that contrasts with the scientific community's focus on accuracy, instead prioritizing "estimating the realistic worst-case scenario and the probability of that scenario." This aligns with the Precautionary Principle, which emphasizes caution when significant harm is possible, especially under high uncertainty.
Non-linearity and tipping points: Explicitly account for "exponential risks, the potential for unprecedented threshold events and the impact of tipping points." The report warns of "Greenland ice sheet melt, coral reef loss, Amazon forest dieback, and major ocean current disruption" as potential tipping points, which can "trigger each other, causing a domino effect or cascade of accelerating and unmanageable damage."
Collaborative across disciplines: Foster collaboration "across science, risk, security, private and public sectors to build deeper insights and reduce blind spots."
Effective governance and reporting: "Embed into appropriate governance structures, maintain independence and report transparently," ideally reporting "to the highest decision-making authorities," such as the UN Security Council (UNSC).
D. Illustrative Planetary Solvency Outputs and Current Position
The report provides an illustrative "Planetary Solvency Summary Dashboard" to demonstrate how these assessments would be communicated.
Current Risk Position: "There has been a significant increase in 2025 risk position, with overall position now outside risk appetite. Global climate impacts Severe. Nature impacts anticipated Severe imminently. Increasing societal fragmentation with active conflicts, heightened geo-political tension and severe stresses on vulnerable states. Economic losses and Mortality still Limited."
Risk Trajectory: The "Risk trajectory pushes all risks further out of appetite soon, with increased breaches of risk tolerances Likely. Immediate policy action required to mitigate risks of Catastrophic level or greater impacts this century and possibly well before 2050."
Climate Change Assessment: The dashboard indicates Climate risk as "AMBER Impact Severe in 2024," with "Catastrophic to Extreme impacts Likely or Highly Likely by 2050." This is driven by accelerated global warming (average 1.5°C above pre-industrial), the inadequacy of current 'net zero' carbon budgets, and the increasing likelihood of triggering multiple climate tipping points.
Economic Assessment: While "Limited economic impacts in 2024," the "Latest estimates of climate impacts now forecast 19% GDP impact by 2050, Decimation or Catastrophic level economic impacts now Possible." This contrasts sharply with older, low-impact estimates (e.g., Nordhaus & Boyer's 2% GDP impact), which "exclude 87% of the economy from analysis."
Interconnectedness of Risks: "Risks are interconnected; climate and nature impacts are likely to have societal consequences." The report emphasizes that even "Limited mortality impacts may well be deemed unacceptable by many."
Tipping Points Underway: "Evidence that tipping points are under way has mounted in the past decade." Examples include Greenland ice sheet, Amazon rainforest, and Atlantic Meridional Overturning Circulation (AMOC) showing early warning signals. The Amazon rainforest tipping point, initially estimated at 3.5°C, "reduces to 1.5°C of warming if deforestation exceeds 20%-25%," demonstrating the compounding effect of nature loss.
Water Risk Case Study (Systemic Risk): Water security is deeply intertwined with climate change, biodiversity loss, food security, and energy security. "Water scarcity has strong links with other systemic risks including food and energy security." Projections indicate that "between 1.5 and 2.5 billion people are exposed to water scarcity globally, with these numbers projected to increase to estimates of up to 4 billion at 4°C." This can lead to "significant societal impacts," including "displacement of millions" and increased "resource competition and conflict." Groundwater depletion and mountain glacier melting are highlighted as approaching "risk tipping points."
3. Recommendations
The report provides the following recommendations to mitigate the risk of Planetary Insolvency:
Implement Planetary Solvency assessments: Establish "independent annual risk assessments to provide clear global systemic risk information to national and supra-national governance institutions," ideally commissioned to provide assessments to the UN Security Council (UNSC).
Set Planetary Solvency limits that respect planetary boundaries: Develop "risk limits and thresholds to manage our activities within these," using "a range of metrics that monitor planetary health, as well as human societal indicators such as the economy, health, equity, food and water security." Emphasize the precautionary principle and annually update carbon budgets.
Enhance governance structures to support Planetary Solvency: Formalize Planetary Solvency to provide "concise, risk-led information" to relevant bodies and the public, built off "realistic systemic risk assessments that recognise tipping points and other non-linear risk drivers." Produce a "Planetary Solvency risk overlay to complement key global scientific outputs," independently produced and without signatory veto.
Take action to mitigate risk: "Create incentives and design policies that enable societies to collaborate towards just and sustainable futures within planetary boundaries."
4. Conclusion
The "Planetary Solvency" report argues that humanity is at a critical juncture, facing unprecedented, interconnected, and severely underestimated global risks. By adapting the robust risk management techniques of the financial industry, particularly actuarial science's focus on identifying and mitigating "risk of ruin," the report offers a pragmatic framework—the RESILIENCE principles—to assess, communicate, and urgently address the threats to Earth's life-support systems. It calls for a fundamental shift in policymaking, moving beyond short-term economic metrics to prioritize the health of the Earth system and acknowledging that current trajectories place humanity "well outside risk appetite," demanding immediate and systemic policy action to avoid "Planetary Insolvency."
2. Quiz & Answer Key
Quiz
Instructions: Answer each question in 2-3 sentences.
What is the core problem identified by the "Planetary Solvency" report regarding current approaches to climate change and nature-driven risks?
Explain the concept of "Planetary Insolvency" as defined in the report.
How does the report connect the financial concept of "solvency" to the Earth system and human society?
Name and briefly describe two of the five main components of the risk management control cycle that the report proposes applying to global challenges.
What is "reverse stress testing" in the context of Planetary Solvency, and why is it considered a critical process?
According to the report, why are the Paris Agreement goals and current "net zero" carbon budgets considered insufficient from a risk perspective?
Briefly explain the principle of "Earth system primacy" within the RESILIENCE framework.
How do traditional risk management approaches fail to adequately assess risks, according to the report, and what does "systemic risk assessment" aim to address?
What is the "precautionary principle," and how does the report suggest it should be applied to risk communication regarding climate and nature risks?
Describe one specific example of a climate system tipping point mentioned in the report and explain its potential impact.
Answer Key
The core problem is that current climate change and nature-driven risk assessments significantly underestimate the true severity and frequency of impacts. They often exclude severe "tail risks," fail to account for interconnectedness, and therefore do not provide a realistic picture of the threats to human prosperity.
"Planetary Insolvency" refers to a state where humanity has degraded the Earth system to such an extent that it can no longer provide enough critical ecosystem services to support human society and the economy. This could manifest as shortages of food and fresh water, or uninhabitable climatic conditions, leading to severe societal disruption.
The report connects financial solvency to the Earth system by drawing an analogy between a solvent pension scheme providing pensions and a solvent Earth system providing services. Just as actuaries manage financial risks to avoid financial ruin, the report argues similar risk management techniques can be applied to manage the Earth system's capacity to support humanity.
Risk Identification: This component involves recognizing all potential risks that could threaten societal objectives and determining the level of risk society is willing to accept. It's about broadly defining what adverse outcomes are possible. Risk Monitoring: This entails the regular assessment of all identified risks, continuously incorporating new data and experiences, and reviewing whether initial assumptions remain valid. It ensures ongoing oversight and triggers action when risks approach or exceed acceptable limits. (Other valid answers: Risk Measurement, Risk Control, Risk Financing).
Reverse stress testing, in the context of Planetary Solvency, is a process used to identify scenarios that would lead to "insolvency" or catastrophic failure of the Earth system to support human society. It helps to uncover uncomfortable possibilities and inform strategic choices aimed at reducing these severe risks, even if their probability is low.
The report states that Paris Agreement goals and current "net zero" carbon budgets were not informed by realistic risk assessments and implicitly accept a high risk of crossing tipping points. For instance, common "net zero" budgets only offer a 50/50 chance of limiting warming to well below 2°C, which is deemed an unacceptably high risk given the potential catastrophic impacts.
"Earth system primacy" within the RESILIENCE framework means prioritizing the health and stability of the Earth system over short-term economic metrics, such as GDP. It recognizes that the economy and society are not separate entities but are fundamentally embedded within and reliant upon the biosphere, making its well-being paramount.
Traditional risk management often considers risks in isolation, failing to capture the cascading and compounding effects within highly interconnected systems like the Earth, society, and economy. Systemic risk assessment aims to address this by explicitly analyzing these network effects and interdependencies, thereby providing a more realistic and comprehensive view of risk proximity and severity.
The precautionary principle emphasizes taking cautious action when there is a possibility that a given course of action may cause significant harm, especially under high uncertainty. The report suggests it means "erring on the side of caution," for example, by acting as if an "iceberg" exists and steering clear, rather than waiting for absolute certainty, in order to mitigate potential harm.
One climate system tipping point mentioned is the Greenland ice sheet melt. Its potential impact is that accelerating ice loss contributes to multi-metre sea-level rise, threatening coastal populations and infrastructure globally. This melting can also reduce the Earth's reflectivity, further accelerating global warming. (Other valid answers: Amazon forest dieback, coral reef loss, major ocean current disruption, permafrost thaw).
3. Essay Questions
Discuss how the "Planetary Solvency" framework proposes to adapt and apply traditional financial risk management techniques to global environmental and societal challenges. What are the strengths and potential limitations of this analogy?
Analyze the significance of "tipping points" and "cascading risks" in the context of the "Planetary Solvency" report. How do these concepts challenge conventional climate change risk assessments, and what are the implications for policy action?
Evaluate the RESILIENCE principles as a comprehensive framework for civilizational risk management. Choose three principles and explain their individual importance and how they collectively contribute to addressing the urgent need for global risk management.
The report highlights that current global goals, such as those from the Paris Agreement, "implicitly accept high risk." Discuss the report's critique of existing climate goals and risk assessment methodologies, providing specific examples of how they underestimate risk.
Based on the report's insights, explain why "Earth system primacy" is a crucial principle for maintaining Planetary Solvency. How does this principle necessitate a fundamental shift in how societies and economies are currently managed?
4. Glossary of Key Terms
Actuarial Science: A discipline that applies mathematical and statistical methods to assess risk in insurance, finance, and other industries. Actuaries use these techniques to ensure the long-term solvency of financial institutions.
AMOC (Atlantic Meridional Overturning Circulation): A large system of ocean currents that transports warm water from the tropics into the North Atlantic and cold water southwards. Its potential slowdown or collapse is a critical climate tipping point.
Anthropocene Reality: The current geological epoch, characterized by significant human impact on Earth's geology and ecosystems. The report depicts this as a period of risk of insolvency due to breached planetary boundaries.
Carbon Budgets: Estimates of the total amount of greenhouse gases that can be emitted into the atmosphere while still having a certain probability of limiting global warming to a specific temperature target (e.g., 1.5°C or 2°C).
Cascading Risks: When the failure or disruption of one system or event triggers a chain reaction of failures or disruptions in other interconnected systems, leading to amplified and widespread impacts.
Climate Sensitivity: The degree to which the Earth's global average temperature will rise in response to a given increase in atmospheric greenhouse gas concentrations. It's a critical, uncertain assumption in climate modeling.
Ecosystem Services: The diverse benefits that nature provides to humanity, such as clean air and water, pollination of crops, regulation of climate, and provision of food and raw materials.
Earth System Boundaries (ESBs): Operating thresholds for the Earth system that also consider the need to minimize significant harm to humans from Earth system change. They are seen as equivalent to solvency limits for society.
Earth System Primacy: A principle within the RESILIENCE framework that emphasizes prioritizing the health of the Earth system above short-term economic metrics, recognizing that society and the economy are dependent on the biosphere.
Financial Solvency: The ability of a financial institution (like an insurance company or pension fund) to meet its long-term financial commitments and liabilities, even under adverse scenarios, ensuring it does not fail or become bankrupt.
Global Decimation Risk: The probability of a loss of 10% or more of the global population and severe disruption of global critical systems (like food) within a given timeframe (years or decades).
Global Risk Management: The systematic process of identifying, assessing, and mitigating risks that transcend national borders and have the potential for widespread, systemic impacts on human prosperity and security.
IPBES (Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services): An independent intergovernmental body which assesses the state of biodiversity and the ecosystem services it provides to society.
IPCC (Intergovernmental Panel on Climate Change): The United Nations body for assessing the science related to climate change, providing regular assessments of the scientific basis of climate change, its impacts and future risks, and options for adaptation and mitigation.
Net Zero Carbon Budgets: Policies or targets aiming to achieve a balance between the amount of greenhouse gas emitted into the atmosphere and the amount removed, resulting in no net increase.
Paris Agreement: An international treaty on climate change adopted in 2015, aiming to limit global warming to well below 2 degrees Celsius, preferably to 1.5 degrees Celsius, compared to pre-industrial levels.
Planetary Boundaries: Nine quantifiable planetary processes and systems that regulate the stability and resilience of the Earth system, defining a "safe operating space for humanity." Crossing these boundaries increases the risk of large-scale, irreversible environmental change.
Planetary Insolvency: A state where humanity has degraded the Earth system to such an extent that it can no longer provide enough critical ecosystem services to support human society and the economy, leading to severe societal disruption.
Planetary Solvency: A global risk management methodology defined as "managing human activity to minimise the risk of societal disruption from the loss of critical support services from nature." It assesses the Earth system's ability to continue supporting human society and the economy.
Precautionary Principle: A guiding principle that emphasizes taking cautious action to prevent potential harm, even when full scientific certainty about the cause-and-effect relationships is lacking, particularly where outcomes are material and detrimental.
RESILIENCE Principles: A set of guidelines proposed in the report for effective global civilizational risk management under the Planetary Solvency framework, covering aspects like risk-led methodology, Earth system primacy, and systemic risk assessment.
Reverse Stress Testing: An actuarial process that starts by defining an undesirable outcome (e.g., insolvency or catastrophic failure) and then identifies scenarios or combinations of events that could lead to that outcome.
SDG Wedding Cake: A visual representation of the UN's Sustainable Development Goals (SDGs) that illustrates how economies and societies are embedded within and dependent on the biosphere, emphasizing the foundational role of ecological health.
Systemic Risk: The potential for individual disruptions or failures within a complex, interconnected system to cascade and spread throughout the entire system, leading to widespread and potentially catastrophic consequences.
Tail Risks: Low-likelihood, but high-severity risks that sit at the extreme end of a risk distribution. These are often difficult to quantify but can have devastating impacts if they occur.
Tipping Points (Climate/Earth System): Critical thresholds in the Earth's climate or ecological systems that, if crossed, can lead to abrupt, irreversible, and often self-reinforcing changes to the state of the system (e.g., ice sheet collapse, Amazon dieback).
UNSC (United Nations Security Council): One of the six principal organs of the United Nations, responsible for maintaining international peace and security. The report suggests it could play a role in cascading Planetary Solvency risk assessments.
5. Timeline of Main Events
Pre-1950s:
Holocene Earth System: The period where humanity operated within planetary boundaries, characterized by abundance and prosperity.
1950s - Present:
Atlantic circulation slowdown: The Atlantic Meridional Overturning Circulation (AMOC) has been in slowdown since the 1950s, a trend that continues into the present.
1972:
Rio Declaration: One of the most important international expressions of the precautionary principle, adopted at the United Nations Conference on Environment and Development.
Early 2000s:
Nordhaus & Boyer's GDP Impact Estimate: This early estimate suggests a negligible 2% GDP damage by 2100 at 3°C of warming, a figure still used by some policymakers to downplay climate change urgency.
2013:
"Climate change prediction: Erring on the side of least drama?" (Brysse et al.): A publication highlighting a potential bias in scientific predictions towards less dramatic outcomes.
2016:
"Options for decoupling economic growth from water use and water pollution" (UNEP International Resource Panel): This report estimates that the gap between global water demand and supply will be 40% by 2030 if no changes are made to water management.
2018:
"Amazon tipping point" (Lovejoy and Nobre): A study focusing on the Amazon tipping point.
2019:
Lenton et al. (2019) Nature publication: Identifies evidence that several climate tipping points are already underway, including ice loss accelerating in Greenland and West Antarctic ice sheets, frequent droughts in the Amazon rainforest, and changes in boreal forests due to fires and pests.
2020:
"Critical slowing down suggests that the western Greenland ice sheet is close to a tipping point" (Boers and Rypdal): Research indicating the proximity of a tipping point for the Western Greenland ice sheet.
United Nations World Water Development Report 2020: Water and Climate Change: Projects that by 2050, at least one in four people will suffer recurring water shortages.
2021:
"The economics of biodiversity: the Dasgupta review" (Dasgupta): A significant report on the economics of biodiversity.
"Amazonia as a carbon source linked to deforestation and climate change" (Gatti et al.): Research indicating the Amazon rainforest has become a carbon source.
"Economists’ erroneous estimates of damages from climate change" (Keen et al.): A paper criticizing traditional economic models for underestimating climate change damages.
"Climate Endgame: Exploring catastrophic climate change scenarios" (Emanuel (ed) et al.): A key publication that defined novel societal impact terms related to catastrophic climate change, including "global decimation risk."
Climate change risk assessment 2021 (Quiggin et al.): Predicts that by 2050, 17% of North Africa's population and 14% of the Middle East's population will experience extreme water stress.
The world climate and security report 2021 (Expert Group of the International Military Council on Climate and Security): Highlights that 90% of land in Iraq is at risk from desertification and degradation, leading to forced migration.
2022:
"Climate emergency – tipping the odds in our favour" (Trust et al.): An earlier report co-authored by Sandy Trust, relevant to the development of Planetary Solvency.
"Our world at risk: Transforming governance for a resilient future" (United Nations Office for Disaster Risk Reduction): A report on transforming governance for resilience.
"Exceeding 1.5°C global warming could trigger multiple climate tipping points" (McKay et al.): Research suggesting that exceeding 1.5°C global warming could trigger multiple climate tipping points.
Sandy Trust's "How to Save the World": Published in 2022, this work outlines concepts related to Planetary Solvency and the Anthropocene Reality.
2023:
"Derailment risk: A systems analysis that identifies risks which could derail the sustainability transition" (Laybourn et al.): A paper identifying risks to the sustainability transition.
"No time to lose: New scenario narratives for action on climate change" (Cliffe et al.): A collaboration between USS and Exeter University providing detailed narrative scenarios for cascading climate-driven risks up to 2030.
Global Tipping Points Report 2023: Identifies 16 tipping elements that could be triggered beyond certain temperature thresholds. It also states that at current warming levels, coral reef tipping points are likely, and Greenland/West Antarctic ice sheets, North Atlantic Sub-Polar Gyre, and permafrost abrupt thaw cannot be ruled out.
The Global Risks Report 2023 (World Economic Forum): Highlights the growing demand-supply gap for natural resources, coupled with climate change, as a top global risk.
"The emperor’s new climate scenarios" (Trust et al.): A paper criticizing climate change economic impact assessments for underestimating risk and calculating ongoing economic growth even in a "hothouse world."
Intergovernmental Panel on Climate Change (IPCC) - AR6 Synthesis Report: Climate Change 2023: Notes that between 1.5 and 2.5 billion people are exposed to water scarcity globally, projected to increase to 4 billion at 4°C.
Renewables 2023: Analysis and forecasts to 2028 (International Energy Agency): Provides analysis and forecasts for renewable energy.
2023 Interconnected Disaster Risks report (UNU/EHS): Highlights groundwater depletion and mountain glacier melting as water-related risks approaching tipping points.
2024:
"The security blind spot: Cascading climate impacts and tipping points threaten national security" (Laybourn et al.): A report highlighting the national security threat posed by cascading climate impacts and tipping points.
"Ecosystem tipping points: Understanding the risks to the economy and the financial system" (Marsden et al.): Identifies critical ecosystems as Earth system tipping points requiring policymaker prioritization, including Amazon rainforest, tropical peatlands, and boreal forests.
"Climate Scorpion – the sting is in the tail" (Trust et al.): An earlier report co-authored by Sandy Trust, which coined the phrase 'Planetary Solvency'.
"The 2024 state of the climate report: Perilous times on planet earth" (Ripple et al.): Reports that the decadal rate of warming has increased to 0.26°C per decade, and notes ongoing record high temperatures globally.
"The economic commitment of climate change" (Kotz et al. for nature.com): Estimates that physical risks from climate change in a current policies scenario might reduce GDP growth by roughly one-third by 2100.
UN World Water Development Report 2024: Discusses the vulnerability of hydropower and thermoelectric power to water shortages.
UN Summit of the Future - Pact for the Future (2024): A global initiative into which Planetary Solvency assessments could be integrated.
Current reality (as of early 2024):Global average temperature for the last 12 months was 1.5°C above pre-industrial levels.
Current global climate impacts are assessed as "Severe."
Nature impacts are anticipated to be "Severe" imminently.
Societal fragmentation is increasing with active conflicts, heightened geopolitical tension, and severe stresses on vulnerable states.
Economic losses and mortality impacts are still "Limited" but trending upwards.
Risk trajectory pushes all risks further out of appetite soon, with increased breaches of risk tolerances "Likely."
January 2025:
Publication of "Planetary Solvency – finding our balance with nature" report: The core source document, providing collaborative insights on global risk management for human prosperity. This report formalizes the concept of Planetary Solvency, introduces the RESILIENCE principles, and presents illustrative outputs.
Recommendations for immediate policy action: The report urges policymakers to implement realistic and effective approaches to global risk management, including annual independent Planetary Solvency assessments for the UN Security Council, setting Planetary Solvency limits, and taking action to mitigate risks.
Planetary Solvency Dashboard (illustrative): Shows the current risk position (2025) as "outside risk appetite" and the trajectory (2050) indicating "Catastrophic to Extreme impacts Likely or Highly Likely."
Amazon tipping point analysis (Flores et al. for nature.com): Up-to-date analysis on temperature ranges for tipping points, stating that if deforestation exceeds 20-25%, the Amazon tipping point could be triggered at 1.5°C of warming (reduced from 3.5°C when climate change and deforestation are taken into account).
Future (unspecified dates, before 2100):
Triggering of multiple climate change tipping points: Risks include Greenland ice sheet melt, coral reef loss, Amazon forest dieback, and major ocean current disruption.
Domino effect/cascade of accelerating damage: Tipping points can trigger each other, leading to unmanageable damage.
Point of no return: If multiple tipping points are triggered, it may become impossible to stabilize the climate.
Risk of Planetary Insolvency: Unless decisive action is taken, catastrophic or extreme impacts are plausible, threatening future prosperity.
GDP destruction: Reverse stress testing suggests a 50% GDP destruction somewhere between 2070 and 2090 under certain scenarios.
Increased water scarcity: By 2050, water scarcity could lead to a decrease of up to 6% of GDP in certain regions.
Water-related displacement: Millions are likely to be displaced in the future due to water shortages, increasing resource competition and conflict.
Cast of Characters
Authors of "Planetary Solvency – finding our balance with nature.pdf" (January 2025):
Sandy Trust: Lead author, member of IFoA, previously authored "How to Save the World" (2022) and co-authored "Climate Scorpion – the sting is in the tail" (2024), "Climate emergency – tipping the odds in our favour" (2022), and "The emperor’s new climate scenarios" (2023). Key figure in developing the Planetary Solvency concept.
Lucy Saye: Co-author of the Planetary Solvency report.
Oliver Bettis: Co-author of the Planetary Solvency report.
Georgina Bedenham: Co-author of the Planetary Solvency report.
Oliver Hampshire: Co-author of the Planetary Solvency report.
Timothy M. Lenton: Co-author of the Planetary Solvency report and Chair in Climate Change and Earth System Science at the University of Exeter. Noted for his 2019 publication on climate system tipping points.
Jesse F. Abrams: Co-author of the Planetary Solvency report.
Planetary Solvency Technical Advisory Group:
Ajay Gambhir: From Accelerator for Systemic Risk Assessment (ASRA).
Professor Erica Thompson: From UCL.
Professor Aled Jones: From Anglia Ruskin University.
Russ Bowdrey: From MSCI.
Jo Paisley: From GARP.
Doug Baird: From Natwest.
Laurie Laybourn: From Strategic Climate Risks Initiative and Chatham House. Co-authored "The security blind spot: Cascading climate impacts and tipping points threaten national security" (2024) and "Derailment risk: A systems analysis that identifies risks which could derail the sustainability transition" (2023).
Dr Luke Kemp: From the University of Notre Dame. Co-authored "Climate Endgame: Exploring catastrophic climate change scenarios" (2021).
Professor Michael Obersteiner: From Oxford.
Molly Jahn: Member of the Technical Advisory Group.
Nick Silver: From Callund Consulting.
Hanna Williams: Member of the Technical Advisory Group.
Dr Nicola Ranger: From Oxford.
Trevor Maynard: From Cambridge.
Willemijn Verdegaal: From TREX.
Mark Manning: Visiting Senior Fellow, London School of Economics and Political Science.
Karen Ellis: From WWF.
Sir David King: From CCAG. Co-authored "Climate change: a risk assessment" (2018).
Patrick Cleary: Member of the Technical Advisory Group.
Zack King: Member of the Technical Advisory Group.
Stephan Harrison: From Exeter.
Robert Clarke: From Client Earth.
Institute and Faculty of Actuaries (IFoA) Leadership (January 2025):
Kartina Tahir Thomson: President of the Institute and Faculty of Actuaries (IFoA). Contributes the Presidential introduction, emphasizing the application of financial risk management techniques to global risks.
Kalpana Shah: Immediate Past President of the IFoA.
Paul Sweeting: President-elect of the IFoA.
Other Individuals and Organizations Referenced:
Nordhaus & Boyer: Economists known for their early estimates of climate change's economic impact, which suggested low GDP damage.
Bilal & Känzig: Economists whose work suggests a much higher GDP impact (up to 44%) from climate change.
Kotz et al.: Authors of "The economic commitment of climate change" (2024), which estimates a one-third reduction in GDP growth by 2100 due to climate physical risks.
Keen et al.: Authors of "Economists’ erroneous estimates of damages from climate change" (2021), criticizing the methods used by some economists to estimate climate damages.
Brysse et al.: Authors of "Climate change prediction: Erring on the side of least drama?" (2013), suggesting a potential bias in climate predictions.
Emanuel (ed) et al.: Authors/editors of "Climate Endgame: Exploring catastrophic climate change scenarios" (2021), which defined key terms for severe climate impacts.
Partha Dasgupta: Author of "The economics of biodiversity: the Dasgupta review" (2021).
Niklas Boers and Martin Rypdal: Authors of "Critical slowing down suggests that the western Greenland ice sheet is close to a tipping point" (2020).
McKay et al.: Authors of "Exceeding 1.5°C global warming could trigger multiple climate tipping points" (2022).
Thomas E Lovejoy and Carlos Nobre: Authors of "Amazon tipping point" (2018).
Gatti et al.: Authors of "Amazonia as a carbon source linked to deforestation and climate change" (2021).
Cliffe et al.: Authors of "No time to lose: New scenario narratives for action on climate change" (2023).
Ripple et al.: Authors of "The 2024 state of the climate report: Perilous times on planet earth" (2024).
Flores et al.: Authors of "Critical transitions in the Amazon forest system" (2024), providing updated analysis on the Amazon tipping point.
Zommers et al.: Authors of "Burning embers: towards more transparent and robust climate-change risk assessments" (2020).
Simon Sharp: Author of "Five Times Faster" (2023).
Marsden et al.: Authors of "Ecosystem tipping points: Understanding risks to the economy and financial system" (2024).
Institutions/Organizations:
IFoA (Institute and Faculty of Actuaries): A professional body of actuaries, a key driver and publisher of the Planetary Solvency report.
Exeter University: A collaborating institution on the Planetary Solvency report and other related research (e.g., "No time to lose").
UNSC (UN Security Council): Recommended recipient of independent Planetary Solvency assessments, to integrate them into global initiatives like the Pact for the Future.
IPBES (Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services): Mentioned as a global scientific output alongside which Planetary Solvency risk overlays could sit.
IPCC (Intergovernmental Panel on Climate Change): Mentioned as a global scientific output alongside which Planetary Solvency risk overlays could sit.
GARP (Global Association of Risk Professionals): Represented on the Technical Advisory Group.
MSCI: Represented on the Technical Advisory Group.
UCL (University College London): Represented on the Technical Advisory Group.
Anglia Ruskin University: Represented on the Technical Advisory Group.
Chatham House: Represented on the Technical Advisory Group.
University of Notre Dame: Represented on the Technical Advisory Group.
Oxford (University of Oxford): Represented on the Technical Advisory Group.
Callund Consulting: Represented on the Technical Advisory Group.
Cambridge (University of Cambridge): Represented on the Technical Advisory Group.
TREX: Represented on the Technical Advisory Group.
London School of Economics and Political Science: Represented on the Technical Advisory Group.
WWF (World Wide Fund for Nature): Represented on the Technical Advisory Group.
CCAG (Climate Crisis Advisory Group): Represented on the Technical Advisory Group.
Client Earth: Represented on the Technical Advisory Group.
Accelerator for Systemic Risk Assessment (ASRA): Contributor to the RESILIENCE principles and represented on the Technical Advisory Group.
Network for Greening the Financial System (NGFS): Provides analysis of GDP impact estimates from climate change and whose scenarios are discussed in the report.
Stockholm Resilience Centre: Source of the "SDG Wedding Cake" illustration.
USS (Universities Superannuation Scheme): The UK's largest pension scheme, which collaborated with Exeter University on "No time to lose."
European Union (EU): A governmental body that uses the precautionary principle.
UK (United Kingdom): A national government that uses the precautionary principle.
UNEP (United Nations Environment Programme) International Resource Panel: Author of the "Options for decoupling economic growth from water use and water pollution" report.
UNU/EHS (United Nations University - Institute for Environment and Human Security): Publisher of the "Interconnected Disaster Risks report."
Water Witness: Author of "Towards Fair Water Footprints," highlighting unsustainable external water footprints of high-income countries.
World Economic Forum: Publisher of "The Global Risks Report," identifying top global risks.
UNESCO (United Nations Educational, Scientific and Cultural Organization): Source for data on urban water availability in the World Water Development Report.
UN-Water: Collaborator on the World Water Development Report.
International Energy Agency (IEA): Publisher of "Renewables 2023."
UN Office for Disaster Risk Reduction: Publisher of "Our world at risk."
6. FAQ
What is Planetary Solvency and why is it urgent?
Planetary Solvency is a global risk management methodology that assesses the Earth system's ability to continue supporting human society and the economy. It aims to minimize the risk of societal disruption caused by the loss of critical support services from nature. The urgency stems from the fact that unmitigated climate change and nature-driven risks have been significantly underestimated. Current warming trends are accelerating, with the average temperature for the last 12 months already 1.5°C above pre-industrial levels, risking the triggering of multiple climate tipping points. These tipping points can cascade, leading to unmanageable and accelerating damage, potentially reaching a point of no return. The report argues that without immediate policy action to change course, catastrophic impacts are highly plausible, threatening future prosperity.
How does "Planetary Solvency" differ from traditional financial solvency?
Traditional financial solvency, as practiced by actuaries, focuses on managing risks to prevent financial insolvency or "ruin" for institutions like pension funds and insurance companies. It involves identifying, measuring, controlling, financing, and monitoring risks to ensure future commitments can be met, even under adverse scenarios (e.g., weathering a 1-in-200-year loss event for an insurance company).
Planetary Solvency adapts these well-established financial risk management techniques to the Earth system. Instead of financial liabilities, it assesses the Earth system's ongoing ability to provide essential services like food, water, energy, and a breathable atmosphere, which underpin society and the economy. It explicitly considers planetary boundaries and Earth system tipping points, acknowledging that if these "critical support services from nature" are disrupted, human systems will experience significant societal and economic shocks, leading to "Planetary Insolvency." The key difference is the scale and subject of risk: from financial entities to the entire global system and its natural foundations.
What are "tipping points" and "cascading risks" in the context of Planetary Solvency?
"Tipping points" are elements of the Earth system that can shift into a qualitatively different and often irreversible state once certain thresholds are crossed. Examples include the melting of the Greenland ice sheet, the collapse of coral reefs, Amazon forest dieback, or the disruption of major ocean currents like the Atlantic Meridional Overturning Circulation (AMOC). Crossing these thresholds can lead to abrupt and often accelerating changes in the Earth system.
"Cascading risks" (or domino effects/cascades) refer to the phenomenon where the triggering of one tipping point increases the likelihood of other tipping points being triggered. This creates a chain reaction of accelerating and unmanageable damage. For instance, the Amazon rainforest's tipping point can be accelerated not just by rising temperatures but also by deforestation, leading to less evapotranspiration, increased droughts, and wildfires, which further reduce carbon drawdown and contribute to warming. Traditional risk management often struggles to capture these interconnected, non-linear, and compounding risks, leading to underestimation of their severity and proximity.
Why are current climate change risk assessments considered inadequate by the report?
The report argues that many high-profile, public climate change risk assessments significantly underestimate the true risk because they often exclude the most severe real-world impacts. These exclusions include the effects of tipping points, extreme events, mass migration, sea-level rise, human health impacts, and geopolitical instability. Furthermore, some models calculate ongoing economic growth even in a "hothouse world," conflicting with scientific predictions of significantly reduced human habitability. For example, some widely-cited models (like Nordhaus & Boyer) estimate negligible GDP damage (e.g., 2% by 2100 at 3°C warming), which is based on assumptions that exclude 87% of the economy from analysis and many of the expected risks. The report advocates for a more realistic approach that considers "tail risks" (low-likelihood but high-severity events) and acknowledges the "risk of ruin," rather than offering "precisely wrong" estimates.
What are the "RESILIENCE principles" and how do they propose to achieve Planetary Solvency?
The "RESILIENCE principles" are a set of guidelines for effective and realistic global civilizational risk management, designed to support Planetary Solvency assessments. They aim to make society resilient through robust risk management practices. The acronym stands for:
Risk-led methodology: Set clear risk limits and track trends using a global dashboard with decision-useful metrics.
Earth system primacy: Prioritize Earth system health over short-term economic metrics, recognizing the economy and society are embedded within the biosphere.
Systemic risk assessment: Analyze interconnected and cascading risks across the Earth system, society, and economy, rather than in isolation.
Imaginative scenarios to examine tail risks and uncertainty: Explore worst-case outcomes and combinations of adverse factors, even if unquantifiable, using techniques like reverse stress testing.
Literacy: Ensure decision-makers have climate, ecological, and risk literacy, promoting honesty and accountability.
Incentives to flag risks: Encourage reporting of realistic worst-case scenarios and apply the precautionary principle when faced with uncertainty.
Effective governance and reporting: Embed Planetary Solvency into appropriate governance structures, maintain independence, and report transparently to the highest decision-making authorities (e.g., UN Security Council).
Non-linear risks and tipping points: Explicitly consider exponential risks, unprecedented threshold events, and their potential for cascading effects.
Collaborative across disciplines: Work across science, risk, security, private, and public sectors to build deeper insights and reduce blind spots.
Earth System Boundaries (ESBs): Develop risk limits and thresholds to manage human activities within safe biophysical boundaries, similar to solvency limits for society.
What actions does the report recommend policymakers take to mitigate the risk of Planetary Insolvency?
The report recommends that policymakers implement realistic and effective approaches to global risk management, focusing on:
Implementing Planetary Solvency assessments: Establish independent annual risk assessments to provide clear global systemic risk information to national and supra-national governance institutions, possibly commissioned for the UN Security Council.
Setting Planetary Solvency limits that respect planetary boundaries: Develop risk limits, thresholds, and a range of metrics that monitor planetary health alongside human societal indicators (economy, health, equity, food, water security). This includes applying the precautionary principle and revisiting climate goals from a risk perspective, updating carbon budgets annually.
Enhancing governance structures to support Planetary Solvency: Formalize Planetary Solvency to provide concise, risk-led information in an easy-to-digest form, building off realistic systemic risk assessments that recognize tipping points. This could involve creating a Planetary Solvency risk overlay to complement existing scientific outputs like IPCC and IPBES summaries.
Taking action to mitigate risk: Create incentives and design policies that enable societies to collaborate towards just and sustainable futures within planetary boundaries. This implies a policy-led change of direction, moving away from current market-led approaches.
How does the concept of "risk appetite" apply to Planetary Solvency?
In financial risk management, "risk appetite" defines the level of risk an organization is willing to accept to achieve its objectives. For Planetary Solvency, the report suggests a very low appetite for "climate, nature and societal risks that undermine the ecosystem services upon which life on Earth depends, threatening human prosperity."
The illustrative Planetary Solvency risk appetite assessment shows that current global approaches implicitly accept "most of these serious risks," placing humanity "in the red zone and well outside risk appetite." This means the current trajectory is deemed unacceptable. The optimal risk position, indicated by the green and yellow zones, is to primarily eliminate these risks or at least minimize their likelihood and impact. The report emphasizes that policymakers, as de facto Planetary Solvency managers, must understand these risk appetites and be accountable for decisions that keep us within tolerable limits.
What is the distinction between "risk" and "uncertainty" in the context of global challenges?
The report highlights the critical distinction between risk and uncertainty, particularly when addressing global challenges:
Risk: Refers to events that might occur, where both the likelihood (probability) and the severity (impact) can be estimated or quantified. This often involves "tail risks," which are low-likelihood but high-severity events that sit at the extreme end of a quantifiable distribution. Actuaries typically calculate capital to cover such quantifiable risks.
Uncertainty: Refers to situations where outcomes are unknown, or probabilities cannot be easily assigned due to a lack of reliable data, comprehensive models, or full understanding of complex interactions. This is particularly relevant for Earth system complexities, such as the exact sensitivity of the Earth to greenhouse gases or the precise timing and cascading effects of tipping points.
Risk management deals with uncertainty by understanding its sources, exploring the sensitivity of outcomes to varying assumptions, and applying the "precautionary principle." This principle emphasizes caution and taking appropriate action even when precise quantification is difficult, erring on the side of caution to avoid potential significant harm. For global challenges, the report argues that ignoring risks due to uncertainty violates this principle and that a "best estimate is better than no estimate at all."
7. Table of Contents
Introduction and Welcome .................................................... 0:00 Opening remarks and episode overview introducing the concept of planetary solvency
What is Planetary Solvency? ................................................ 2:15 Defining planetary solvency and why this concept is emerging with urgency now
The Essential Support Services .............................................. 4:30 Understanding ecosystem services and their non-substitutable nature
The Uncomfortable Truth ..................................................... 6:45 Current state of human activity pushing Earth systems toward instability
Understanding Tipping Points ................................................ 9:20 Defining climate tipping points and the risk of cascading domino effects
The Risk Assessment Crisis .................................................. 12:40 How we're hugely underestimating planetary risks and the flaws in current models
The Titanic Analogy ......................................................... 16:10 Powerful metaphor illustrating our dangerous risk assessment methods
Learning from Actuaries ..................................................... 18:35 How financial risk management techniques can be applied to planetary systems
Reverse Stress Testing Explained ........................................... 21:20 Understanding the actuarial approach to extreme risk scenarios
Science vs. Risk Management ................................................ 24:50 The crucial distinction between scientific caution and proactive risk management
The New Leadership Requirements ............................................ 27:40 Why policymakers need fundamental climate and ecological literacy
The RESILIENCE Framework Introduction ...................................... 30:15 Overview of the comprehensive risk management blueprint
R - Risk-Led Methodology ................................................... 32:30 Setting clear risk limits and planetary solvency risk appetite
E - Earth System Primacy ................................................... 35:45 Reordering priorities to recognize economic dependence on Earth systems
S - Systemic Risk Assessment ............................................... 38:20 Understanding interconnected, cascading risks across systems
I - Imaginative Scenarios .................................................. 41:10 Examining tail risks and low-probability, high-impact events
L - Latest Science ......................................................... 44:25 Bridging the gap between scientific discoveries and policy action
I - Incentives to Flag Risks ............................................... 46:50 Addressing the structural problem of overly cautious risk communication
E - Educate Stakeholders ................................................... 49:30 Critical knowledge gaps in policymaker understanding, including ocean current collapse risks
N - Non-linearity and Tipping Points ....................................... 53:15 Accounting for exponential risks and threshold events, Amazon rainforest example
C - Collaborative Across Disciplines ....................................... 56:40 Need for diverse expertise beyond climate science
E - Effective Governance and Reporting ...................................... 58:45 Direct reporting to highest decision-making authorities
The Planetary Solvency Dashboard ........................................... 61:20 Practical assessment tool showing current risk status
Current Risk Assessment: Climate ........................................... 63:10 Severe impacts now, catastrophic warming likely pre-2050
Current Risk Assessment: Nature ............................................ 64:40 Ongoing degradation with catastrophic risks by 2050
Current Risk Assessment: Society ........................................... 66:15 Current tensions moving toward severe fragmentation risks
Current Risk Assessment: Economy ........................................... 67:30 Limited current impacts but 19% GDP loss projected by 2050
Dashboard Summary and Implications ......................................... 69:00 Overall assessment: outside risk appetite, immediate action required
Closing Reflections ........................................................ 71:45 Reframing our relationship with nature and the call for rigorous risk management
Personal Application ....................................................... 74:20 How listeners can apply these frameworks to their own lives and decisions
Episode Conclusion ......................................................... 76:10 Final thoughts on uncomfortable truths and building resilience
8. Index
AMOC (Atlantic Meridional Overturning Circulation) ...................... 49:30
Amazon rainforest tipping point .................................... 53:15, 56:40
Biodiversity loss ......................................................... 64:40
Cascading effects .................................................. 12:40, 38:20
Catastrophic outcomes ......................................... 6:45, 63:10, 69:00
Climate change ................................................ 6:45, 63:10, 71:45
Climate literacy ................................................ 27:40, 49:30
Climate models ................................................ 16:10, 41:10
Climate tipping points ......................................... 9:20, 53:15
Collaborative approach ................................................ 56:40
Coral reef collapse ................................................... 9:20
Deep uncertainty ................................................... 18:35
Domino effect ..................................................... 12:40
Earth system ........................................ 4:30, 35:45, 49:30, 71:45
Earth system primacy ................................................. 35:45
Economic impacts .................................................... 67:30
Economic models .................................................... 16:10
Ecosystem services ..................................... 4:30, 32:30, 35:45
Effective governance ................................................. 58:45
Externalities ....................................................... 16:10
Extreme events ...................................................... 12:40
Financial risk management ...................................... 18:35, 21:20
Food security ............................................. 38:20, 49:30
GDP impact .......................................................... 67:30
Global warming ............................................. 6:45, 63:10
Greenland ice sheet ................................................. 9:20
Gulf Stream ........................................................ 49:30
Imaginative scenarios ............................................... 41:10
Incentives to flag risks ............................................ 46:50
Interconnected systems ............................................. 38:20
Latest science ..................................................... 44:25
Mass mortality ...................................................... 12:40
Non-linearity ...................................................... 53:15
Non-substitutable ................................................... 4:30
Ocean currents ..................................................... 49:30
Paris Agreement .................................................... 12:40
Planetary boundaries ................................................ 30:15
Planetary insolvency ................................................ 12:40
Planetary solvency .......................... 2:15, 30:15, 61:20, 69:00, 71:45
Planetary solvency dashboard ..................................... 61:20, 69:00
Policymakers ................................................ 27:40, 49:30
Precautionary principle ............................................. 46:50
RESILIENCE framework ................................................ 30:15
Reverse stress testing .............................................. 21:20
Risk appetite ................................................ 21:20, 32:30
Risk assessment .................................................... 12:40
Risk-led methodology ................................................ 32:30
Risk limits ........................................................ 32:30
Risk management ........................................ 18:35, 24:50, 71:45
Sea level rise ...................................................... 6:45
Societal collapse .................................................. 32:30
Stakeholder education ............................................... 49:30
Systemic risk ................................................ 32:30, 38:20
Tail risks ......................................................... 41:10
Temperature rise ................................................... 12:40
Tipping points ................................ 9:20, 12:40, 53:15, 56:40, 63:10
Titanic analogy .................................................... 16:10
Uncertainty ........................................................ 18:35
Water scarcity ..................................................... 38:20
9. Post-Episode Fact Check
Fact Check Summary: ✅ VERIFIED
Report Authenticity: CONFIRMED The "Planetary Solvency - Finding Our Balance with Nature" report was indeed published in January 2025 by the Institute and Faculty of Actuaries (IFoA) in collaboration with the University of Exeter, authored by Sandy Trust and others. Planetary Solvency – finding our balance with nature | Institute and Faculty of Actuaries +2
Temperature Claims: CONFIRMED The episode's claim that "the average global temperature for the last 12 months was already 1.5 degrees Celsius above pre-industrial levels" is accurate. Multiple authoritative sources confirm that 2024 was the first calendar year to exceed 1.5°C above pre-industrial levels, with global temperatures reaching approximately 1.55°C above the 1850-1900 baseline. Copernicus: 2024 is the first year to exceed 1.5°C above pre-industrial level | Copernicus +4
Core Concepts: VERIFIED
Planetary solvency is accurately defined as "managing human activity to minimise the risk of societal disruption from the loss of critical support services from nature" Actuaries highlight the increasing risk of Planetary Insolvency - GOV.UK
The report does develop "a framework for global risk management to address these risks and show how this approach can support future prosperity" Planetary Solvency – finding our balance with nature | Institute and Faculty of Actuaries
The collaboration between actuaries and climate scientists is confirmed across multiple sources
Methodology and Framework: ACCURATE The episode's description of the RESILIENCE framework and the application of actuarial risk management principles to planetary systems aligns with the verified report content. The comparison to financial risk management (0.5% failure rates vs. 50% climate policy success rates) represents accurate actuarial methodology applied to climate policy.
Scientific Claims: CONSISTENT While I couldn't verify every specific scientific claim in the episode (such as the exact AMOC collapse probability or Amazon tipping point thresholds) within my search limits, the general scientific concepts discussed are consistent with current climate science literature and the methodological approach described aligns with established actuarial practices.
Dashboard and Risk Assessment: CONFIRMED The existence of the Planetary Solvency dashboard is confirmed, with the IFoA and University of Exeter having "created a new climate risk tool that addresses the discrepancy between climate projections and policy outcomes." IFoA and University of Exeter launch Planetary Solvency dashboard | Institute and Faculty of Actuaries
Overall Assessment: The episode presents an accurate representation of the January 2025 Planetary Solvency report, correctly attributes claims to verified sources, and accurately describes both the actuarial methodology and current climate science consensus. The factual claims I was able to verify are all accurate.
10. Image (3000 x 3000 pixels)
