Insurers’ Warning: $5 Trillion ‘Extreme Weather’ Loss from Climate Risks

The myth that fighting climate change is a sideline initiative has been busted as research shows global economic loss from extreme weather could reach $5 trillion.

Lloyd’s, the London-based insurance marketplace, and Cambridge Centre for Risk Studies carried out research creating  ‘’a systematic risk scenario’’ which models the global economic impact of extreme weather.

While the results are hypothetical, Lloyd’s said it can improve business and policymakers’ understanding of exposure to the potential impact of critical risks.

The global economy was becoming increasingly subject to systemic threats as it became more complex, the researchers said.

The researchers calculated the estimated impact of food and water shocks on global GDP over five years to create a model of global economic losses. It looked at extreme weather events linked to climate change that cause crop failures and food and water shortages.

The result?

The weighted average loss would amount to $5 Trillion. At its worst, it could reach up to $17.6 trillion and $3 trillion at its lowest.

Lloyd’s also modelled for events in concentrated regions.

The Caribbean region would lose 19% of its GDP over five years if the extreme weather events were concentrated there, while Greater China could lose up to $4.6 trillion, the study estimated.

The results highlight the importance of significant climate risk protection.

Businesses that invest in climate impact reduction invest in securing their future financial environment.

The results indicate that our global economy is at a crossroads – reduce emissions or face the repercussions.


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