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Risk management approach to climate change will mitigate against ‘ruin scenario’, says new report

07 November 2022

A global temperature increase of 1.5°C could cause irreversible changes to the Earth’s climate, triggering multiple tipping points like Greenland ice sheet collapse or Amazon dieback, which could interact and cascade like dominoes.

That’s according to a report by the Institute and Faculty of Actuaries (IFoA) written in collaboration with The Climate Crisis Advisory Group (CCAG), warning that even under the current targets set out in the Glasgow Pact, global society is heading towards a ‘ruin scenario’.
The report calls for policymakers and stakeholders to take a risk management approach to identify, measure and mitigate the effects of further temperature rises. This will support the broader effort to build resilience and climate adaptation into national and international systems as extreme events become more frequent.

The report sets out the key findings:

  • Climate change is a risk management problem – Catastrophic outcomes from climate change are now inevitable, so it is crucial that policy-makers have a degree of climate and risk literacy as they plan for the uncertain future.
  • Carbon budgets should be treated with caution when planning for long-term sustainable investment – Large margins for error and ‘no surprises’ assumptions are a source of undue confidence in carbon budgets, which have only a 50% chance or less of hitting the 1.5°C target.
  • Tipping points mean there is even more uncertainty – We need to plan for low-likelihood, high-severity risks. Incorporating uncertainty would lead to a downward revision in available carbon budgets, an acceleration towards decarbonisation and a move to better understand and invest in options for adaptation.
  • Adaptation is key to planning for further warming and climate impacts – Climate resilient development strategies will be key to ensuring adaptation is fair and inclusive of all citizens, local and indigenous communities and groups who are most vulnerable to climate change.

There is hope, but no time to lose.

The report serves as a timely reminder for CCAG’s RRR strategy:

  • reduce emissions urgently, deeply and rapidly, while ensuring an orderly, just transition
  • remove CO₂ from the atmosphere in vast quantities
  • repair broken parts of the climate system, starting with the Arctic, to try and reverse local changes and stop the cascade effects of those changes through global climate systems.

The report is also calling for action to be accelerated by educating the public to be more carbon and climate literate. By embracing the economic benefits of steering humanity back to a safe climate trajectory, stakeholders across communities and nations will be better poised to benefit from a green transition that works for all.

Sir David King, Chair of the Climate Crisis Advisory Group, commented:

“Human caused climate change has run down the clock, and we are fast running out of time to keep the critical 1.5 degrees hopes alive. But whilst this may seem daunting, we have the science at hand to reduce emissions and stabilise the climate. What this report clearly shows is that even at 1.5 degrees serious mitigation and risk management will be required alongside a strategy of Reduce, Remove and Repair to deliver a manageable future for humanity.”

Sandy Trust, Former Chair of the IFoA Sustainability Board, commented:

“Climate change is a risk-management problem on a global scale. Policymakers must act now to accelerate climate action to avoid catastrophic impacts on society. We have underestimated the pace of climate change, as well as the level of risk associated with 1.5 degrees of warming. We need to prepare for further climate impacts, as well as reducing emissions rapidly. However, we have the solutions required and it is within our collective capabilities to steer our future back onto a safe course.”

For more information, read the full report from the IFOA and CCAG: Tipping the odds in our favour (PDF, 7MB).

~ENDS~

Contact

Sonia Sequeira, Media Relations Manager, IFoA

Tel: (+44)7525 592 198
Email: sonia.sequeira@actuaries.org.uk

Dani Wiggins

Tel: (+44)7760 136108 
Email: ccag@firstlightgroup.io

About the Institute and Faculty of Actuaries

The Institute and Faculty of Actuaries (IFoA) is a royal chartered, not-for-profit, professional body.

Research undertaken by the IFoA is not commercial. As a learned society, research helps us to fulfil our royal charter requirements to further actuarial science and serve the public interest.

Actuaries provide commercial, financial, and prudential advice on the management of a business’s assets and liabilities, especially where long-term management and planning are critical to the success of any business venture. They also advise individuals and advise on social and public interest issues.

Members of the IFoA have a statutory role in the supervision of pension funds and life insurance companies. They also have a statutory role to provide actuarial opinions for managing agents at Lloyd’s of London.

Climate change and sustainability represents a variety of risks, including material financial risks for financial institutions. That is why the IFoA issued a Risk Alert this year, calling on actuaries to appropriately consider and communicate clearly the impact of climate change and sustainability-related issues in their actuarial work.

Members are governed by the Institute and Faculty of Actuaries. A rigorous examination system is supported by a programme of continuing professional development and a professional code of conduct supports high standards reflecting the significant role of actuaries in society.

The IFoA is available to provide independent expert comment to the media on a range of actuarial-related issues, including Covid-19 and its long-term consequences, mortality, pensions, life and general insurance, health and care, finance and investment, climate change and sustainability

About CCAG

CCAG is an independent group of experts that reflects a wide range of academic disciplines and indigenous knowledge, comprising 16 experts from 11 nations. It includes leading authorities in climate science, carbon emissions, energy, environment, and natural resources. Some of the members also participate in governmental advisory groups. Its function is complementary, not an alternative, to these other roles. It will look at in-depth policy and financial issues, including ones not currently on governmental agendas. All scientists have agreed to give up their time at no cost.

Virtual monthly meetings are held on the final Thursday of every month at 12:00 BST and streamed via Youtube and Twitter. To keep up to date with the group, visit ccag.earth or follow us on Twitter, Instagram and Youtube.

Full list of CCAG members:

  • Sir David King (Chair), Cambridge University – focus on alerting governments and institutions around the world to the dangers of the climate crisis and urgent need for climate repair.
  • Alice Hill, Council on Foreign Relations - expertise in building resilience to catastrophic risks, in particular climate risk.
  • Dr Arunabha Ghosh, The Council on Energy, Environment and Water – expert in public policy and climate change advisor to governments, industry, civil society and international organisations around the world.
  • Professor Dr Johan Rockström, Potsdam University – specialises in environmental science with an emphasis on water resources and global sustainability.
  • Professor Lorraine Whitmarsh, University of Bath – particular interest in perceptions and behaviours in relation to climate change, energy and transport.
  • Professor Nerilie Abram, Australian National University – research expertise covering climate change impacts, from tropical oceans to Antarctica.
  • Dr Tero Mustonen, Snowchange Cooperative – specialises in Arctic biodiversity and impacts to Indigenous and local communities and nomadic societies of the Arctic.
  • Professor Mark Maslin, University College London – particular expertise in understanding the Anthropocene and how it relates to the major challenges facing humanity in the 21st century.
  • Dr Robert W. Corell, US Global Environment Technology Foundation – particular interest in global and regional climate change and the link between science and public policy.
  • Professor Qi Ye, Hong Kong University Science and Technology and Tsinghua University China – expert on China’s environmental policy with a focus on climate change, environment, energy, natural resources and urbanisation.
  • Dr Klaus Lackner, Arizona State University – research interests include closing the carbon cycle by capturing carbon dioxide from the air, carbon sequestration, carbon foot-printing, innovative energy and energy and environmental policy.
  • Professor Mercedes Bustamante, University of Brasilia – recognised for contributions to the ecological knowledge of threatened tropical ecosystems and their interactions with human-induced changes.
  • Professor Lavanya Rajamani, Oxford University – specialist in the field of international environmental and climate change law.
  • Professor Laura Diaz Anadon, University of Cambridge – expert on energy, climate and innovation policy, the drivers of technological change and policy evaluation.
  • Dr Fatima Denton, United Nations University – particular expertise in natural resource management, especially in regards to Africa.
  • Christophe McGlade, International Energy Agency - energy specialist, particularly in oil and gas analysis.
Contact Details:

Contact Details:

For all media queries please contact Sonia Sequeira, Media Relations Manager

+44 (0) 20 7632 2126

For out of hours, the Press Office can be contacted at: press.office@actuaries.org.uk. We aim to respond to all enquiries as quickly as possible.
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