Why nature loss is now a serious financial risk

When you hear the phrase financial risk, you might think of inflation, interest rates or a wobble in the markets. The new warning from the Institute and Faculty of Actuaries asks us to think bigger. In 'Tipping into the Wild Unknown', the latest report in its Planetary Solvency series, co-author Georgina Bedenham of the Government Actuary's Department argues that nature loss should be treated as a serious economic threat, not as a side note to climate change. That matters because actuaries do not just crunch numbers for insurers and pension schemes. Their work helps governments, regulators and financial institutions decide how much danger to prepare for. If they are saying nature belongs in that conversation, we should pay attention.

The report starts from a simple idea: nature is not scenery. It is part of the basic systems that keep daily life going. According to the Institute and Faculty of Actuaries, healthy ecosystems help support food production, water supplies, public health, climate regulation and much of the economy. **What this means:** when soils weaken, rivers run short, forests are cut back or pollinators disappear, the damage does not stay in the countryside. It shows up in harvests, bills, jobs, insurance costs and the reliability of supply chains.

One reason the report feels urgent is that climate risk has, slowly, made its way into official models, while nature risk is still often missing. The authors argue that many governments, regulators and financial institutions are still using tools that do not properly account for biodiversity loss, even though climate change and nature loss affect one another. That gap matters more than it may sound. If a risk is not built into the model, it can be pushed to the edge of decision-making. In real life, that can mean underestimating threats to lending, investment, pricing and public planning.

The report also warns that some of the damage is not distant or theoretical. It points to problems already hitting food systems: soil degradation, water stress and the decline of pollinators. You do not need to work in finance to see why that matters. If crops fail more often or become harder to grow, prices can jump and shortages can spread quickly. The authors also flag sharper shocks, including failures in major food-producing regions and disruption to trade. When several pressures land at once, the result can be volatility that travels fast, from farms to ports to shops to household budgets.

Another part of the warning is about disease. The report says deforestation and land-use change can raise the risk of zoonotic spillover, where diseases move from animals into humans. COVID-19 is used as a reminder that environmental disruption can become a public health and economic crisis at extraordinary speed. Looking further ahead, the report points to ecosystem tipping points such as coral reef collapse or a severe loss of pollinators. These are the kinds of changes that may be very hard, or impossible, to reverse on human timescales. In plain terms, some damage does not neatly bounce back once a system has been pushed too far.

This is why the co-authors say climate-only modelling is no longer good enough. You cannot separate a warming world from disappearing species, damaged soils, stressed water systems and changing disease patterns. Each problem can worsen the others, which makes single-issue forecasting less useful than it once seemed. Georgina Bedenham says actuaries should start using new biodiversity metrics and quantification tools, but she also makes a second point that is easy to miss. Numbers matter, yet narrative and qualitative thinking matter too. **What this means:** uncertainty is not a reason to wait; it is a reason to ask better questions now.

For readers, the biggest lesson is that nature loss is not only an environmental story. According to the Government Actuary's Department and the Institute and Faculty of Actuaries, it is also a story about inflation, supply chains, health outcomes, credit risk and market stability. Once you see nature as infrastructure, the argument becomes much harder to dismiss. That is why this report feels useful beyond the actuarial world. It gives you a clearer way to read the news: when you hear about deforestation, pollinator decline or water stress, you are also hearing about economic risk building in the background. Georgina Bedenham is discussing the findings in a recent episode of The Actuary podcast, but the central message is already plain enough: bringing nature into decision-making is no longer optional.