Emily Forsyth-Davies, member of the IFoA’s Sustainability Board, explains why she believes our new report ‘Planetary Solvency: Tipping into the wild unknown’ is so important.
“We are treating a finite, interconnected ledger of biological wealth as an infinite extraction fund – and the maths simply no longer adds up.” – Emma Howard Boyd CBE, Chair, Group Board, ClientEarth
That quote, taken from Planetary Solvency: Tipping into the Wild Unknown, captures exactly why I found this report so compelling.
There is now clear recognition that climate risk is financial risk. What this paper does is convincingly extend that logic to nature. Not as an adjacent issue or a subset of climate, but as something more fundamental: the underlying system on which our economies, our models, and ultimately our continued existence depend.
At its core, the report reframes nature as critical infrastructure. That may sound rhetorical, but it has very real implications. Infrastructure is something we maintain, monitor and invest in. It is something we stress test. And crucially, it is something we do not assume to be infinite.
Yet that is precisely how nature has been treated.
The report makes the case that biodiversity loss and ecosystem degradation are no longer distant environmental concerns. They are already feeding through into the systems we rely on: food, water, health and supply chains. And doing so in ways that are systemic, interacting and increasingly difficult to model.
For those of us working in risk, this should feel uncomfortably familiar. We are used to dealing with uncertainty, with complex dependencies, with tail risks. But we are less comfortable when the assumptions underpinning our models start to break down.
This has been a key feature of the IFoA’s University of Exeter collaborations and earlier Planetary Solvency work. Here, that thinking is extended into natural capital and one of the report’s most compelling aspects is its emphasis on tipping points. Not just gradual degradation, but thresholds beyond which systems may not recover on any meaningful timescale. The language here is important: the risk is not just volatility, it is irreversibility.
That challenges a deeply embedded mindset in financial modelling. Much of what we do assumes that shocks, however severe, are ultimately temporary. That markets adjust, that systems adapt, that equilibrium is restored. But what happens when the underlying system itself is changing state?
The Planetary Solvency dashboard illustrates this shift clearly, showing how nature-related risks, alongside climate risks, are already moving beyond traditional risk appetite, with potentially severe societal and economic consequences.
The paper does not pretend to have all the answers. In fact, it is quite explicit about the limits of current modelling approaches. Metrics are incomplete. Interactions are poorly understood. Scenario analysis remains underdeveloped. But rather than weakening the argument, this uncertainty strengthens it. If anything, it suggests we are systematically underestimating the scale of the risk because the frameworks we rely on were not built to capture it.
There is also something refreshing about the way the report connects the abstract to the tangible. Food system fragility, zoonotic disease, supply chain disruption – these are not hypothetical constructs. They are risks that are already materialising, and in some cases accelerating.
The implication is not that we abandon modelling or throw out existing frameworks. Rather, it is that we expand them. That we move beyond climate focused scenarios to integrated climate–nature analysis. That we begin to treat ecological degradation not as an externality, but as a core driver of financial risk.
This is, in many ways, a mindset shift as much as a technical challenge.
For actuaries and others in the financial sector, the message is both simple and uncomfortable: ignoring nature risk is no longer a neutral choice, it is an active assumption that these risks do not matter, or will somehow resolve themselves. It is a form of mis-specification. A failure to capture a set of risks that are already affecting outcomes and will increasingly do so in the future.
What I find particularly valuable about this report is that it does not frame this as an abstract ethical issue, but as a practical one with significant financial impacts. If our goal is to understand and manage risk and to support economic and societal resilience and long-term stability, then nature has to be part of that conversation.
Otherwise, as the report puts it, the maths no longer adds up.
