Actuaries and financial institutions are being urged to treat biodiversity loss as a systemic financial risk after a joint report warned that nature degradation is already undermining food security.
Report links ecosystem decline to inflation and market stability
The Institute and Faculty of Actuaries (IFoA) and Anglia Ruskin University released Planetary Solvency: Tipping into the wild unknown, which argues that soil degradation, water scarcity and pollinator decline are already reducing crop yields and increasing food‑price volatility. The document says these pressures are amplified by acute shocks such as extreme weather, trade disruption and geopolitical conflict.
One example cited is the ongoing conflict in the Gulf region, which threatens supply chains that pass through the Strait of Hormuz. The strait carries roughly 30 % of global fertilizer shipments, and any interruption could affect planting seasons that cannot be remedied later.
Sandy Trust, lead author of the IFoA study, noted, “Events in the Gulf region pose a significantly greater risk to global food security than in 2022, when the combination of a Ukraine energy crisis and extreme weather events impacted harvests, driving up prices.” Trust warned that higher energy costs could be compounded by global food shortages, creating the potential for structurally high inflation.
Pollinators, deforestation and the broader economic picture
The report highlights pollinator decline as a key factor that could cut crop yields and raise food prices, noting that pollinators support around 75 % of global crop production. Large‑scale deforestation, especially in the Amazon, threatens rainfall patterns and carbon cycles essential for stable yields.
Aled Jones, director of the Global Sustainability Institute at Anglia Ruskin, referenced the UK government’s National Security Assessment on Global Ecosystems, which indicated that “the potential collapse of nature is a realistic possibility.” He added that the current economic model prioritizes efficiency and profit, creating a just‑in‑time system that offers little resilience against nature’s decline.
While the study calls for urgent investment in sustainable land use and protection for pollinators, it also urges policymakers, regulators, actuaries and the broader financial sector to adopt integrated climate‑nature scenarios.
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Financial risk models have traditionally focused on market variables and credit metrics. Adding biodiversity metrics forces a shift toward longer‑term horizon thinking, which may clash with short‑term performance pressures that dominate many investment strategies.
Risk models must evolve.
Paul Sweeting, president of the IFoA, said, “Nature loss is not only an environmental crisis but a serious risk to economic stability and societal resilience due to the rise in food insecurity.” He emphasized that actuaries have an important role in identifying, measuring and managing these systemic risks, ensuring they are not overlooked in financial and policy decisions.
Separate research from Ortec Finance echoed the need for greater attention to climate and nature risks. Its 2026 climate scenario update warned that higher warming scenarios could pressure national debt levels, sovereign risk premiums and bond returns, while also affecting long‑term infrastructure and real‑estate investments.
Maurits van Joolingen, managing director for climate scenarios and sustainability at Ortec Finance, said climate risk had been “an important missing link in the total portfolio assessment of climate risk.” He noted that pension funds investing in private assets must be aware of physical climate‑related risks, especially for assets held over 15 years or more.
The combined messages from the IFoA study and Ortec Finance analysis suggest that ignoring biodiversity loss could leave financial systems exposed to shocks that are both environmental and economic. As the world grapples with rising food prices and supply‑chain uncertainties, the call for integrated risk assessment grows louder.
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