Planetary Solvency: The Earth's Balance Sheet is in the Red
The 2025 Climate Crisis Risk Assessment (Institute and Faculty of Actuaries at Exeter University) uses financial metaphors that should make even the most hardened Wall Street banker uncomfortable.
With every article and podcast episode, we provide comprehensive study materials: References, Executive Summary, Briefing Document, Quiz, Essay Questions, Glossary, Timeline, Cast, FAQ, Table of Contents, Index, Polls, 3k Image, and Fact Check.
The planet is basically bankrupt, and most of us are still shopping like there's no tomorrow. That's not hyperbole—it's the conclusion of actual financial experts who are finally using the language of risk assessment to translate our environmental crisis into terms the business world might actually listen to.
The Earth Is Not a Limitless Credit Card
Imagine if the planet was your bank account.
Would you keep withdrawing money without checking the balance? Would you ignore the overdraft notices? Would you max out your credit cards and take out more loans while your financial advisor screams that you're headed for bankruptcy?
That's exactly what we're doing to Earth, according to the 2025 Climate Crisis Risk Assessment report from the Institute and Faculty of Actuaries at Exeter University. It's aptly titled "Planetary Solvency: Finding Our Balance With Nature," and it uses financial metaphors that should make even the most hardened Wall Street banker uncomfortable.
We're treating the planet like an infinite ATM, but the receipts are showing a dangerous truth: we've overdrawn our account.
We've Already Blown Past 1.5°C
Here's the sobering reality the report confirms: we've already exceeded the 1.5°C warming threshold on a 12-month average. This isn't some hypothetical future scenario anymore. It's happening now, in real-time, while politicians debate whether climate change exists and corporations greenwash their way through quarterly earnings calls.
Even if we dramatically cut emissions today, further warming is already locked in. The planet's oven timer is set, and we can't just turn it off. The planet will keep heating up for a while, even after we stop pumping greenhouse gases into the atmosphere.
This isn't doomerism—it's what the actual data tells us.
The Language of Risk Has Failed Us
Part of the problem, according to the report, is that our risk assessment methods are fundamentally flawed. We're too short-sighted, too optimistic, and we consistently ignore worst-case scenarios. It's like assessing the Titanic's risk by only considering a minor scratch from an iceberg, while completely ignoring the possibility that the ship could sink.
Sound familiar? It should. Our culture is optimized for short-term thinking:
Quarterly profits over long-term sustainability
GDP growth over ecosystem health
Convenience today over survival tomorrow
We're playing ecological roulette with the only habitable planet we know of, hoping for the best while refusing to prepare for the worst.
Earth System Primacy: Flipping the Script
The report introduces a concept that should be obvious but somehow isn't: Earth system primacy. This principle flips our current thinking on its head. Instead of treating the environment as a subset of the economy—something to be exploited for financial gain—it recognizes that the economy is actually a subset of the environment.
Without a functioning planet, there is no economy. Full stop.
This isn't tree-hugging environmentalism; it's basic logic. The financial system doesn't exist in a vacuum. It depends on stable climates, productive ecosystems, and the countless "services" that nature provides for free: clean air, fresh water, fertile soil, pollination, flood protection.
These aren't luxuries. They're the foundation of human civilization.
Systemic Risk Assessment: Everything Is Connected
Another key principle the report emphasizes is systemic risk assessment. This recognizes that climate risks aren't isolated problems—they're interconnected in complex ways.
Take water, for example. Droughts, floods, and pollution aren't separate issues; they're linked phenomena that can cascade into food insecurity, energy shortages, mass migration, and political instability.
Climate change isn't just an environmental issue. It's a threat multiplier that touches every aspect of society:
Economic stability
Food security
Public health
National security
Social cohesion
We can't address these challenges piecemeal. We need comprehensive approaches that recognize the connections between them.
From Passengers to Crew Members
The most powerful metaphor in the report is simple: we're not passengers on this planet; we're the crew.
It's time we started acting like it.
This doesn't mean individual actions alone will save us. Recycling your plastic bottles won't stop climate change, and neither will switching to oat milk (though both are fine things to do). The scale of the challenge demands systemic changes and bold policy action.
But that doesn't let us off the hook. We still have agency, both as consumers and as citizens.
Every dollar you spend is essentially a vote for the kind of world you want to see. Support businesses that prioritize sustainability. Divest from fossil fuels. Choose renewable energy when possible. Reduce meat consumption. Use public transportation or walk when you can.
These aren't sacrifices; they're investments in a livable future.
Beyond Sustainability: Regeneration and Thriving
The most radical aspect of the planetary solvency framework is that it moves beyond the concept of mere sustainability. It's not enough to simply do less harm—we need to actively regenerate the natural systems we've damaged.
Imagine a world where:
Cities enhance biodiversity instead of destroying it
Agriculture builds soil health instead of depleting it
Energy systems are not just clean but restorative
Economic growth is measured by wellbeing, not just GDP
This isn't utopian thinking. It's the practical recognition that our survival depends on healing our relationship with the natural world.
Tipping Points: Negative and Positive
Much of climate discourse focuses on negative tipping points—thresholds beyond which change becomes irreversible and potentially catastrophic. Melting ice sheets, dying coral reefs, deforestation in the Amazon—these are frightening possibilities that keep scientists up at night.
But the report also emphasizes the existence of positive tipping points—moments when beneficial changes reach critical mass and spread rapidly through society:
Renewable energy becoming cheaper than fossil fuels
Electric vehicles outperforming gas-powered cars
Plant-based diets becoming mainstream
Circular economy models disrupting wasteful industries
These transitions are already underway, and they could accelerate with the right support. The key is to invest in these positive tipping points while avoiding the negative ones.
The Hard Truth
Let's be honest: we're in trouble. The planet's balance sheet is in the red, and we're approaching ecological bankruptcy. The warning lights aren't just flashing; they're screaming.
But bankruptcy isn't inevitable. We have the knowledge, the technology, and the resources to change course. What we've lacked is the collective will to act.
This report makes clear that planetary solvency isn't just an environmental imperative—it's an economic necessity. The businesses and nations that recognize this reality will be the ones that thrive in the coming decades. Those that cling to the old paradigm of extraction and exploitation will find themselves on the wrong side of history.
The choice is ours. We can continue draining our planetary bank account until it's empty, or we can start making deposits. We can be passive passengers on a sinking ship, or we can take the wheel and chart a new course.
The Earth is calling in its loans. It's time to pay our debts.
Planetary Solvency - Global risk management for human prosperity
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STUDY MATERIALS
1. Briefing Document
Executive Summary:
This report, produced with input from a diverse group of experts and institutions, argues that current climate change risk assessments significantly underestimate the true risks facing humanity and the planet. It introduces the concept of "Planetary Solvency," defined as "Managing human activity to minimise the risk of societal disruption from the loss of critical support services from nature." The report advocates for a new, risk-led approach to global risk management, based on the "RESILIENCE" principles, which explicitly considers tipping points, systemic risks, and the primacy of the Earth system. It calls for independent annual risk assessments to be presented to bodies like the UN Security Council (UNSC) to drive more effective policy action. The current market-led approach to mitigating climate and nature risks is deemed insufficient, and a more fundamental, policy-led change is needed to avoid "Planetary Insolvency."
Key Themes and Ideas:
Underestimation of Climate Risks: The report contends that existing climate change risk assessments are flawed because they:
Exclude many of the most severe risks, such as tipping points, extreme events, migration, and geopolitical risks. "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."
Fail to account for the interconnectedness of risks and cascading effects. "Traditional risk management techniques typically focus on single risks in isolation, missing network effects and interconnections, underestimating cascading, compounding risks."
Rely on overly optimistic economic growth assumptions, even in scenarios with significant climate damage.
Do not fully incorporate uncertainty and tail risks.
"High-profile climate change assessments in wide use significantly underestimate risk as they exclude many of the most severe risks we could face. Yet it is these extremes that should drive policy decisions – what is society willing to accept? And what actions can we take to mitigate those outcomes that we find unacceptable?"
Planetary Solvency: This is presented as a new framework for global risk management, adapting financial risk management techniques to address climate change and other systemic risks.
Defined as: "Managing human activity to minimise the risk of societal disruption from the loss of critical support services from nature."
It emphasizes the fundamental reliance of society and the economy on the Earth system. "Our society and economy fundamentally depend on the Earth system which provides essentials such as food, water, energy and raw materials."
It draws parallels between financial solvency (avoiding bankruptcy) and planetary solvency (avoiding ecological collapse and societal disruption). "In the same way that a solvent pension scheme is one that continues to be able to provide pensions, a solvent Earth system is one that continues to provide the services we rely on, support ongoing prosperity, and a safe and just future."
The RESILIENCE Principles: These principles are designed to guide effective and realistic Planetary Solvency risk assessments:
Risk-led methodology: Set clear risk limits and track trends.
Earth system primacy: Prioritize Earth system health over short-term economic metrics.
Systemic risk assessment: Consider interconnectedness and cascading effects.
Imaginative scenarios: Examine tail risks and uncertainty.
Limit breaches: Define planetary solvency limits that respect planetary boundaries.
Incentives to flag risks: Encourage open communication about potential dangers.
Effective governance and reporting: Embed into appropriate governance structures, maintain independence, and report transparently.
Non-linear risks and tipping points: Consider exponential risks and threshold events.
Collaborative across disciplines: Work across science, risk, security, and the public and private sectors.
Enhance governance structures to support Planetary Solvency
Tipping Points and Systemic Risk: The report highlights the critical importance of understanding and addressing climate tipping points.
"We risk triggering tipping points such as Greenland ice sheet melt, coral reef loss, Amazon forest dieback, and major ocean current disruption."
"Tipping points can trigger each other, causing a domino effect or cascade of accelerating and unmanageable damage."
"If multiple tipping points are triggered, there may be a point of no return, after which it may be impossible to stabilise the climate."
It emphasizes that these tipping points are interconnected, and traditional risk management approaches often fail to capture these complex interactions. The Amazon rainforest case study exemplifies how deforestation accelerates the tipping point.
Warming of 1.5°C is extremely risky, with a chance of triggering multiple climate tipping points such as the collapse of ice sheets in Greenland, West Antarctica and the Himalayas, permafrost melt, Amazon die back and halting major ocean current circulation.
These tipping points may cascade, triggering each other. Collectively, these physical system tipping points act to accelerate global warming (by increasing GHG levels) and the impacts, (e.g. accelerating multi-metre sea level rise).
Governance and Policy Recommendations:
Establish independent annual risk assessments to provide clear global systemic risk information to national and supra-national governance institutions.
Given the level of risk to peace and security, an independent body could be commissioned to provide Planetary Solvency assessments to the UN Security Council (UNSC).
Develop risk limits and thresholds to manage our activities within planetary boundaries.
Revisit climate goals from a risk perspective and implement a process to update carbon budgets annually, which accounts for warming experience and emissions.
Create incentives and design policies that enable societies to collaborate towards just and sustainable futures within planetary boundaries.
Illustrative Output & Dashboard:
The report includes an illustrative "Planetary Solvency Risk Dashboard" as an example of how to communicate risk information to policymakers. This dashboard assesses the current risk position and trajectory for climate, nature, society, and the economy. The illustrative dashboard shows that "Global climate impacts [are] Severe" and "Nature impacts anticipated Severe imminently." The overall risk position is deemed to be "outside risk appetite," requiring "Immediate policy action."
Water Risk and Interconnectedness:
The report also includes a case study on water risk, highlighting how climate change and biodiversity loss increase hazards to our water supply and infrastructure. It notes that water scarcity is linked to other systemic risks, including food and energy security, and that the effects of climate change on water availability are not felt equally around the world. Also, the report highlights two water-related risks, groundwater depletion and mountain glacier melting, as approaching risk tipping points. High income countries have significant external water footprints, typically between 40% and 80%, but in some cases as high as 94%, which can be traced to economies in the global south which face extreme water insecurity and climate vulnerability.
Conclusion:
The "Climate Crisis Risk Assessment" report delivers a strong warning about the inadequacy of current approaches to climate risk management. It proposes "Planetary Solvency" as a more comprehensive and realistic framework, emphasizing the need for urgent policy action to avoid catastrophic outcomes.
2. Quiz & Answer Key
Quiz: Short Answer Questions
What is Planetary Solvency, and why is it important?
According to the report, how do current climate change risk assessment methodologies underestimate economic impact?
What are climate change tipping points, and why are they a cause for concern?
Explain the difference between "risk" and "uncertainty" as defined in the actuarial context.
Briefly outline the five components of the risk management control cycle.
What are the RESILIENCE principles, and what is their purpose in the context of Planetary Solvency?
Why is Earth system primacy important when assessing Planetary Solvency?
What is systemic risk, and why is it important to consider in Planetary Solvency assessments?
Explain the precautionary principle and its role in risk management related to climate change.
What are some potential impacts of water scarcity beyond just human consumption?
Quiz Answer Key
Planetary Solvency is defined as managing human activity to minimize the risk of societal disruption from the loss of critical support services from nature. It is important because human society and the economy fundamentally depend on the Earth system for essential resources and services.
Current climate change risk assessment methodologies often exclude the most severe risks, fail to recognize the risk of ruin, and disregard network effects and interconnections, leading to an underestimation of cascading and compounding risks. Furthermore, many analyses exclude the impact of tipping points, extreme events, migration, sea level rise, human health impacts, or geopolitical risk.
Climate change tipping points are thresholds beyond which elements of the Earth system shift into a qualitatively different state, such as the collapse of ice sheets or major ocean current disruption. They are a cause for concern because they can trigger irreversible changes and accelerate global warming, leading to unmanageable damage.
Risk is characterized by events that might occur and their impact, categorized by likelihood and severity, while uncertainty cannot be easily quantified or modeled because the outcomes themselves may be unknown, or probabilities cannot be assigned.
The five components of the risk management control cycle are: risk identification, risk measurement, risk control, risk financing, and risk monitoring, which are essential for managing risk in the actuarial context.
The RESILIENCE principles (Risk-led methodology, Earth system primacy, Systemic risk assessment, Imaginative scenarios, Incentives to flag risks, Non-linearity and tipping points, Collaborative across disciplines, and Effective governance and reporting) are designed to support effective and realistic Planetary Solvency risk assessments and make society resilient through global risk management practices.
Earth system primacy is important because our society and economy are embedded within and dependent on the biosphere, emphasizing that economic measures should not be elevated above the health and stability of the Earth system. The inputs to the economy, raw materials, and energy flow from the Earth system.
Systemic risk is the potential for individual disruptions or failures to cascade into a system-wide failure, encompassing cascading and compounding risks through various interactions within the Earth system, society, and economy, making it crucial for comprehensive Planetary Solvency assessments.
The precautionary principle emphasizes caution when a course of action may cause significant harm, particularly where there is high uncertainty. It encourages proactive measures to mitigate risks, even when scientific certainty is lacking, and it is essential for addressing the potential impacts of climate change.
Beyond human consumption, water scarcity can lead to decreased GDP, food and energy insecurity, unsafe sanitation leading to disease, disruption to ecosystems and transportation routes, and increased migration and conflict.
3. Essay Questions
Discuss the limitations of relying solely on economic metrics like GDP in assessing the risks associated with climate change. How does the concept of "Planetary Solvency" address these limitations?
Explain how the RESILIENCE principles can be applied to improve global risk management related to climate change and environmental degradation. Provide specific examples of how these principles can lead to more effective policy decisions.
The report highlights the interconnectedness of various global risks, such as water scarcity, food security, and energy security. Analyze the cascading effects of these interconnected risks and discuss the importance of adopting a systemic approach to risk assessment.
Discuss the role of tipping points in climate change and their potential impact on society and the economy. How can policymakers better account for tipping points in their risk assessments and mitigation strategies?
Evaluate the effectiveness of current "net zero" carbon budgets in limiting global warming to 1.5°C-2°C. What alternative approaches does the report suggest for setting climate goals and carbon budgets from a risk perspective?
4. Glossary of Key Terms
Planetary Solvency: Managing human activity to minimize the risk of societal disruption from the loss of critical support services from nature.
Tipping Point: A threshold beyond which an element of the Earth system shifts to a new, often irreversible, state.
Earth System Boundaries (ESBs): Operating thresholds designed to minimize significant harm to humans from Earth system change, akin to solvency limits for society.
Risk: Events that might occur and their impact on an objective, categorized by likelihood (the chance that a risk event may occur) and severity (the impact of an event should it occur).
Uncertainty: Outcomes that cannot be easily quantified or modeled, where outcomes themselves may be unknown or probabilities cannot be assigned.
Risk Appetite: The level of risk an organization is willing to accept.
Tail Risks: Low-likelihood but high-severity risks that sit at the extreme end of the risk distribution.
Reverse Stress Testing: A process that identifies scenarios that could cause failure (insolvency).
RESILIENCE Principles: A set of guidelines (Risk-led methodology, Earth system primacy, Systemic risk assessment, Imaginative scenarios, Incentives to flag risks, Non-linearity and tipping points, Collaborative across disciplines, and Effective governance and reporting) for effective and realistic Planetary Solvency risk assessments.
Earth System Primacy: Prioritizing Earth system health over short-term economic metrics.
Systemic Risk: The potential for individual disruptions or failures to cascade into a system-wide failure.
Precautionary Principle: Emphasizes caution if it is possible that a given course of action may cause significant harm, particularly where there is high uncertainty.
Ecosystem Services: Benefits that humans derive from ecosystems, such as food, water, climate regulation, and pollination.
Climate Endgame: The potential for climate change to be a global catastrophic threat.
Risk Impact Matrix: A tool used to communicate risk position clearly, assessing likelihood and impact across dimensions like economy, mortality, climate change, nature, and society.
Risk Dashboard: A tool used to provide summary information to policymakers.
Carbon Budget: The cumulative amount of carbon dioxide emissions permitted over a specified period to keep within a certain temperature threshold.
5. Timeline of Main Events
Pre-Industrial Era: Baseline period used for measuring global temperature increases.
Past 12 Months (Prior to January 2025): Average global temperature reaches 1.5°C above pre-industrial levels. The rate of warming has accelerated to 0.26°C per decade.
1950s: Atlantic circulation begins to slow down.
1972: UN Stockholm Declaration
1992: Rio Declaration (precautionary principle)
2020: Niklas Boers and Martin Rypdal publish "Critical slowing down suggests that the western Greenland ice sheet is close to a tipping point"
2021:Partha Dasgupta publishes "The economics of biodiversity: the Dasgupta review"
Keen et al publish "Economists’ erroneous estimates of damages from climate change"
Gatti et al publish "Amazonia as a carbon source linked to deforestation and climate change"
Kemp et al publish "Climate Endgame: Exploring catastrophic climate change scenarios"
2022:Sandy Trust et al publish "Climate emergency – tipping the odds in our favour"
McKay et al publish "Exceeding 1.5°C global warming could trigger multiple climate tipping points"
United Nations Office for Disaster Risk Reduction publishes "Our world at risk: Transforming governance for a resilient future"
2023:Sandy Trust et al publish "The emperor’s new climate scenarios"
Layburn et al publish "Derailment risk: A systems analysis that identifies risks which could derail the sustainability transition"
Cliffe et al publish "No time to lose: New scenario narratives for action on climate change"
UNU/EHS publishes "Risk tipping points, 2023 Interconnected Disaster Risks report"
Layburn et al publish "The security blind spot: Cascading climate impacts and tipping points threaten national security"
2024:ASRA publishes "Principles for systemic risk assessment and response"
Trust et al publish "Climate scorpion – the sting is in the tail"
Ripple et al publish "The 2024 state of the climate report: Perilous times on planet earth"
Flores et al publish "Critical transitions in the Amazon forest system"
Kotz et al publish "The economic commitment of climate change"
2025 (January): Publication of "Climate Crisis Risk Assessment .pdf" report outlining Planetary Solvency concept and RESILIENCE principles, indicating that current risk position is outside of risk appetite, and recommends immediate policy action. Report indicates that the 12-month average temperature has exceeded 1.5°C above pre-industrial levels, and the global climate impacts are severe.
2030 (Projected):Potential 40% shortfall in global water supply if water management doesn't change.
2050 (Projected):Latest estimates of climate impacts now forecast 19% GDP impact by 2050.
Catastrophic to Extreme climate impacts are Likely or Highly Likely by 2050.
Urban populations in North Africa and the Middle East likely to experience extreme water stress.
2070-2090 (Projected): "Expect 50% GDP destruction."
2100 (Projected):Under current policies, a 3°C warming is projected. GDP impact estimates vary widely (2% to 44%).
Physical risks from climate change might reduce GDP growth roughly 1/3rd by 2100.
Some policymakers are using the earlier Nordhaus damage estimate to justify an assertion that while climate change is of concern, it is not an immediate priority due to the negligible expected impact of 2% of GDP damage by 2100 at 3°C of warming.
Cast of Characters:
Sandy Trust: Author of the "Climate Crisis Risk Assessment" report and "How to Save the World", and coiner of the phrase "Planetary Solvency".
Lucy Saye: Author of the "Climate Crisis Risk Assessment" report.
Oliver Bettis: Author of the "Climate Crisis Risk Assessment" report.
Georgina Bedenham: Author of the "Climate Crisis Risk Assessment" report.
Oliver Hampshire: Author of the "Climate Crisis Risk Assessment" report.
Timothy M. Lenton: Chair in Climate Change and Earth System Science, University of Exeter.
Jesse F. Abrams: Author of the "Climate Crisis Risk Assessment" report.
Ajay Gambhir: Accelerator for Systemic Risk Assessment.
Professor Erica Thompson: UCL.
Professor Aled Jones: Anglia Ruskin University.
Russ Bowdrey: MSCI.
Jo Paisley: GARP.
Doug Baird: Natwest.
Laurie Laybourn: Strategic Climate Risks Initiative and Chatham House.
Dr Luke Kemp: University of Notre Dame.
Professor Michael Obersteiner: Oxford.
Molly Jahn: No affiliation given.
Nick Silver: Callund Consulting.
Hanna Williams: No affiliation given.
Dr Nicola Ranger: Oxford.
Trevor Maynard: Cambridge.
Willemijn Verdegaal: TREX.
Mark Manning: Visiting Senior Fellow, London School of Economics and Political Science.
Karen Ellis: WWF.
Sir David King: CCAG.
Patrick Cleary: No affiliation given.
Zack King: No affiliation given.
Stephan Harrison: Exeter.
Robert Clarke: Client Earth.
Michael van der Meer: M&G, cover picture credit.
Kartina Tahir Thomson: President, Institute and Faculty of Actuaries (IFoA).
Kalpana Shah: Immediate Past President, IFoA.
Paul Sweeting: President-elect, IFoA.
Nordhaus & Boyer: Economists whose GDP impact estimates are considered too low by the report.
Bilal & Känzig: Economists whose GDP impact estimates are considered high by the report.
Kotz et al: Authors of paper estimating that physical risks from climate change might reduce GDP growth roughly 1/3rd by 2100.
Simon Sharp: Author of "Five Times Faster" (2023).
Emanuel (ed) et al: Authors of "Climate Endgame: Exploring catastrophic climate change scenarios" (2021).
Partha Dasgupta: Author of "The economics of biodiversity: the Dasgupta review" (2021).
Niklas Boers & 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).
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).
Gatti et al: Authors of "Amazonia as a carbon source linked to deforestation and climate change" (2021).
Thomas E Lovejoy & Carlos Nobre: Authors of "Amazon tipping point" (2018).
6. FAQ
What is Planetary Solvency and why is it important?
Planetary Solvency is a global risk management methodology that assesses the Earth system’s ability to continue supporting human society and the economy. It involves managing human activity to minimize the risk of societal disruption from the loss of critical support services from nature. It's important because society and the economy fundamentally depend on the Earth system for essentials like food, water, energy, and raw materials. Maintaining Planetary Solvency requires respecting the planet's biophysical limits to preserve natural capital for future generations and ensure the ongoing provision of ecosystem services. Current approaches to mitigating climate and nature risks are not sufficient, leading to an increasing risk of severe societal disruption (Planetary Insolvency) as the economic system drives further global warming and nature degradation.
Why are current climate change risk assessments inadequate?
Many high-profile climate change risk assessments underestimate the risk because they often exclude many of the most severe risks expected to occur, such as the impact of tipping points, extreme events, migration, sea-level rise, human health impacts, or geopolitical risks. They also often focus primarily on economic consequences, seeking to determine the impact of climate change on GDP, which can downplay the broader societal and environmental impacts. Furthermore, these assessments may calculate ongoing economic growth even in a severely impacted world, as climate damages are lower than growth assumptions. They tend to focus on single risks in isolation, missing network effects and interconnections, underestimating cascading, compounding risks.
What are climate tipping points, and why are they a major concern?
Climate tipping points are thresholds beyond which certain elements of the Earth system shift into a qualitatively different state (e.g., irreversible ice sheet melt, Amazon dieback, or major ocean current disruption). These tipping points can trigger each other, causing a domino effect or cascade of accelerating and unmanageable damage. The major concern is that if multiple tipping points are triggered, there may be a point of no return, after which it may be impossible to stabilize the climate and prevent catastrophic consequences for human society and the environment. Some tipping points accelerate global warming by increasing GHG levels. Evidence suggests many tipping points are underway.
What are the RESILIENCE principles, and how do they contribute to effective risk management?
The RESILIENCE principles are a set of guidelines designed to support effective and realistic Planetary Solvency risk assessments. They consist of:
Risk-led methodology: Set clear risk limits and track trends using a global dashboard.
Earth system primacy: Prioritize Earth system health over short-term economic metrics.
Systemic risk assessment: Consider interconnected risks and cascading effects.
Imaginative scenarios: Examine tail risks and uncertainty, including worst-case scenarios.
Lon-linearity and tipping points: Consider exponential risks and the potential for unprecedented events.
Incentives to flag risks: Encourage open communication and transparency.
Effective governance and reporting: Embed into appropriate governance structures, maintain independence, and report transparently.
Non-linearity risks and tipping points: Consider exponential risks, the potential for unprecedented threshold events and the impact of tipping points.
Collaborative across disciplines: Work 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.
These principles promote a comprehensive and realistic approach to risk management, helping policymakers make informed decisions to mitigate risks and build societal resilience.
How can Planetary Solvency assessments be used to inform policy decisions?
Planetary Solvency assessments provide concise, risk-led information on the implications of failing to meet global goals. They offer realistic systemic risk assessments that recognize tipping points and other non-linear risk drivers. Policymakers can use these assessments to:
Establish independent annual risk assessments to provide clear global systemic risk information to national and supra-national governance institutions, such as the UN Security Council (UNSC).
Develop risk limits and thresholds to manage activities within planetary boundaries.
Update carbon budgets annually, accounting for warming experience and emissions.
Create incentives and design policies that enable societies to collaborate towards just and sustainable futures within planetary boundaries.
What role do actuaries and risk professionals play in addressing planetary risks?
Actuaries and other risk professionals have expertise in understanding and managing long-term financial risks and uncertainty. They can adapt financial risk management techniques to help society manage climate change and other planetary risks. They can use scenario planning, reverse stress testing, and other risk management tools to uncover uncomfortable possibilities and inform choices to reduce risk. They can assess the likelihood and severity of adverse outcomes, including tail risks (low-probability, high-impact events), and help organizations and governments take action to mitigate risks outside acceptable levels. Their work is designed to safeguard desired outcomes even if the future develops in an adverse way for the organization.
How does water scarcity illustrate the need for a systemic risk assessment approach?
Water scarcity demonstrates the need for a systemic risk assessment because it is interconnected with various other risks, including food and energy security. Climate change and biodiversity loss exacerbate water scarcity through increased droughts, extreme weather events, glacier melt, and deforestation. Socioeconomic factors like population growth and consumption patterns also contribute. Water scarcity, in turn, affects agriculture, energy production, sanitation, and can lead to migration, resource competition, and conflict. Traditional risk management approaches that consider water scarcity in isolation may underestimate its true impact, as they fail to capture these complex interconnections and cascading effects. High income countries can have significant external water footprints traced to economies in the global south which face extreme water insecurity and climate vulnerability.
What is the current risk position and trajectory, according to the illustrative Planetary Solvency assessment?
The illustrative Planetary Solvency assessment indicates that the current risk position is outside risk appetite, with global climate impacts considered Severe. The risk trajectory is concerning, with the potential for Catastrophic to Extreme impacts Likely or Highly Likely by 2050. Immediate policy action is required to mitigate the risks of Catastrophic or greater impacts this century and possibly well before 2050. The cascading and interconnecting nature of risks requires a systemic approach and solution. The overall position is that society is in the "red zone" and well outside its risk appetite, implicitly accepting serious risks with the current approach.
7. Table of Contents
00:00 - Introduction
Introduction to Heliox podcast and the concept of planetary solvency, comparing Earth to a bank account that might go bankrupt.
01:12 - The 2025 Climate Risk Assessment Report
Discussion of the "Climate Crisis Risk Assessment, Planetary Solvency" report from the Institute and Faculty of Actuaries at Exeter University.
02:05 - Ecosystem Services
Explanation of ecosystem services as benefits humans receive from a healthy planet, including clean air, water, fertile soil, and stable climate.
02:48 - Planetary Boundaries
Introduction to the concept of planetary boundaries as safe operating limits for climate change, biodiversity loss, and resource use.
03:45 - Planetary Solvency Concept
Definition of planetary solvency as actively managing our impact on the planet to ensure stability and support for humanity.
04:56 - Current Risk Assessment Issues
Discussion of problems with current risk assessment approaches: short-sightedness, optimism bias, and ignoring worst-case scenarios.
06:08 - Resilience Principles
Introduction to the resilience principles for realistic risk assessment.
06:30 - Earth System Primacy
Explanation of Earth system primacy principle: recognizing that a healthy economy depends on a healthy planet.
07:30 - Systemic Risk Assessment
Discussion of systemic risk assessment and the interconnectedness of environmental risks.
08:28 - Imaginative Scenarios
The importance of considering worst-case scenarios in planning, even if they seem unlikely.
09:05 - Latest Science Principle
The need to continually update risk assessments based on the most current scientific findings.
09:45 - Climate Change Risk Dashboard
Overview of alarming findings from the climate change risk dashboard, including exceeding 1.5°C of warming.
11:15 - Concrete Action Recommendations
Discussion of steps recommended by the report to mitigate climate risks.
12:58 - Energy Transition
Focus on accelerating energy transition as a key recommendation for action.
13:45 - Positive Tipping Points
Explanation of positive tipping points that can accelerate transition to sustainability.
15:18 - Climate Adaptation
Discussion of the necessity of adaptation alongside mitigation efforts.
16:20 - Climate and National Security
The connection between climate change and national security issues.
17:40 - Individual Action
Exploration of individual actions and their place in the bigger picture of planetary solvency.
19:20 - Personal Choices and Planetary Impact
Discussion of how personal choices affect planet health and individual wellbeing.
21:05 - Systemic Change Requirements
The need for systemic changes alongside individual actions.
22:10 - Shifting Values and Priorities
Discussion of fundamental shifts needed in values and priorities for planetary solvency.
23:20 - Signs of Positive Change
Examples of encouraging shifts already happening around the world.
24:45 - Collective Responsibility
Emphasizing collective responsibility as "crew members" rather than passengers on Earth.
25:40 - Consumer Choices and Voting with Your Wallet
Discussion of how consumer choices impact sustainability and market direction.
27:20 - Starting Small with Personal Changes
Advice on beginning with small sustainable changes that can build momentum.
28:25 - Advocacy and Activism
How to amplify individual impact through advocacy and community organizing.
29:50 - Maintaining Motivation
Strategies for staying motivated despite the scale of environmental challenges.
31:10 - Celebrating Progress
The importance of recognizing positive change and celebrating victories.
32:05 - Beyond Sustainability to Regeneration
Shifting from avoiding harm to actively regenerating natural systems.
33:30 - Closing Thoughts
Final reflections on planetary solvency and the potential for a thriving future.
34:40 - Outro
Closing remarks about the podcast's underlying narratives and invitation to explore more content.
8. Index
Adaptation, 15:18, 16:20
Activism, 28:25, 29:05
Bank account metaphor, 01:30, 25:40
Bathtub metaphor, 03:15
Biodiversity, 02:55, 32:40
Circular economy, 14:15, 23:30
Clean energy, 12:58, 13:20, 14:25
Climate change, 02:55, 06:45, 09:45, 15:18, 16:20
Climate Crisis Risk Assessment, 01:12, 09:45
Collective will, 24:45, 30:15
Consumer choices, 25:40, 26:15
Crew members metaphor, 24:45
Diet, plant-based, 14:15, 19:20, 27:20
Earth system primacy, 06:30, 17:40
Ecosystem services, 02:05
Economic growth, 06:30, 22:10
Emissions, 10:20, 12:58
Energy transition, 12:58, 14:25
Exeter University, 01:12
Food systems, 15:18, 16:30
Fossil fuels, 12:58, 14:15, 25:40
Future generations, 04:05, 22:10, 30:15
Global warming, 09:45, 10:20
Heat waves, 11:10
Imaginative scenarios, 08:28
Individual action, 17:40, 18:30, 25:40, 29:50
Infrastructure, 15:18
Institute and Faculty of Actuaries, 01:12
Interconnectedness, 07:30, 08:05, 21:05
Latest science principle, 09:05
Mass migration, 16:20
National security, 15:18, 16:20
Net Zero, 12:58
Optimism, 05:15, 23:20, 31:10
Pension fund comparison, 04:05
Planetary boundaries, 02:48, 32:05
Planetary solvency, 01:30, 03:45, 22:10, 33:30
Policy changes, 12:58, 21:05, 28:25
Positive tipping points, 13:45, 14:15
Regeneration, 22:10, 32:05, 33:05
Renewable energy, 12:58, 14:15, 23:30
Resilience principles, 06:08, 11:15
Resource conflicts, 16:20
Risk assessment, 04:56, 05:15, 06:08, 07:30
Short-sightedness, 04:56, 05:15, 21:05
State failure, 16:20
Sustainability, 17:40, 19:20, 23:30, 32:05
Systemic risk assessment, 07:30, 21:05
Thriving, 33:05, 33:30
Tipping points, negative, 05:25, 10:35
Titanic analogy, 05:25
Transportation, 19:20, 26:15, 27:40
Values shift, 22:10, 32:05
Voting with your wallet, 25:40
Water risk, 07:40, 11:10
Worst-case scenarios, 04:56, 08:28
9. Poll
10. Post-Episode Fact Check
Claim: We've already exceeded 1.5 degrees Celsius of warming on a 12-month average
Assessment: Accurate as of March 2025
In 2023, global temperatures temporarily exceeded 1.5°C above pre-industrial levels for certain periods. By early 2024, climate data confirmed that the world had experienced its first 12-month period with average temperatures exceeding 1.5°C above pre-industrial levels. This trend continued into 2025, making the podcast's statement factually accurate at the time of its release in March 2025.
Claim: Emissions and greenhouse gas concentrations are at record highs
Assessment: Accurate
Greenhouse gas concentrations have consistently reached record levels year after year. The World Meteorological Organization and other climate monitoring bodies have confirmed that CO2, methane, and nitrous oxide concentrations continued to rise through 2023-2024. This trend has persisted into 2025, making the statement accurate.
Claim: We're likely to exceed 2 degrees Celsius of warming by 2050 without dramatic policy shifts
Assessment: Consistent with scientific projections
This claim aligns with IPCC projections and other major climate research bodies' forecasts. Without significant mitigation efforts beyond current policies, the world is on track to exceed 2°C warming before 2050. This statement accurately reflects the scientific consensus as of 2025.
Claim: The concept of "planetary boundaries" represents safe operating limits for humanity
Assessment: Accurate
The planetary boundaries framework was developed by scientists at the Stockholm Resilience Centre and has been widely accepted in the scientific community. It identifies nine boundaries that, if crossed, could destabilize Earth's systems. This framework is accurately represented in the podcast.
Claim: Current risk assessment methods are often too short-sighted and optimistic
Assessment: Supported by evidence
Climate risk assessment experts have consistently identified short-termism, optimism bias, and failure to account for worst-case scenarios as limitations in conventional approaches. The IPCC and other bodies have called for more robust risk assessment frameworks that better address uncertainty and interconnected risks.
Claim: Positive tipping points in renewable energy, sustainable food, and circular economy can accelerate transitions
Assessment: Supported by evidence
Research on socioeconomic and technological tipping points supports this claim. For example, the rapid cost decline of renewable energy technologies has indeed created accelerating adoption patterns, and similar potential exists in other sustainability domains as described in the podcast.
Claim: Climate change is connected to national security issues
Assessment: Accurate
Defense and intelligence agencies worldwide, including the U.S. Department of Defense, have formally recognized climate change as a "threat multiplier" that can exacerbate geopolitical tensions, contribute to resource conflicts, and trigger migration crises. This characterization is accurate.
Overall Assessment:
The podcast presents climate science concepts that are largely consistent with current scientific understanding as of March 2025. While some specific details about the referenced report cannot be verified, the major climate concepts, risk frameworks, and proposed solutions reflect legitimate approaches in climate science and sustainability. The 1.5°C warming claim is accurate for the podcast's 2025 release date, as this threshold was indeed crossed on a 12-month average basis by that time.
11. Image (3000 x 3000 pixels)
