Biodiversity & Nature Related Risks for Actuaries: An Introduction

Institute and Faculty of Actuaries | June 2023

Financial institutions are exposed to businesses highly dependent on nature through their lending, advisory, investing and underwriting activities meaning that losses to these companies due to ongoing nature decline can be transmitted to the financial sector. As a result, biodiversity loss and nature related risks are widely acknowledged by regulators12, central banks9,10 and industry8,26, to drive risks for the financial sector. At the same time, decisions made by financial institutions facilitate impacts on nature that can be positive or negative. Biodiversity loss could lead to a higher frequency or severity of claims and greater geographic or sectoral concentration of claims.20

This report is an introduction to biodiversity and nature related risks for actuaries in all fields of work. It provides an overview of current topics and industry developments and highlights how they are relevant to actuarial work.