UK Actuaries Sound Alarm on Loss Models Downplaying Climate Risk.

The article discusses a study by the Institute and Faculty of Actuaries, in collaboration with the University of Exeter, which reveals that the finance industry is using climate models that underestimate the rate of temperature increase. The study highlights that financial firms are not applying the same level of scrutiny to climate risks as they do to other significant risks, leading to a much higher chance of failure. It also notes that current models inadequately account for reductions in aerosol pollution and the underestimated effects of deforestation, suggesting that even achieving net-zero emissions by 2050 may not prevent global warming from exceeding 1.5°C. The authors advocate for a "planet solvency recovery plan" to better manage climate risks, emphasizing the need for rigorous assessment and emergency measures to protect economic growth. [Extracted from the article]