The Next Economy
Risk Managers, Consumers Cite Climate Change as Top Emerging Concern

The news about extreme-weather events since 2023 has been nearly unrelenting: Atmospheric rivers unleashed flooding in California; deadly wildfires in Canada, Maui and Texas; tornadoes and cyclones in regions as far-flung as Southeast Africa, Myanmar and Mississippi. Not to mention the widespread droughts and heatwaves: The US set a record in 2023 with 28 extreme-weather events costing $1 billion or more, surpassing the previous record of 20 such events in 2020, according to the National Centers for Environmental Information (NCEI). The total US price tag in 2023 came to at least $92.9 billion.

Unprecedented weather is expected to continue through 2024. The NCEI reports this past January broke record temperatures — prolonging a trend that started in 2023, which was the hottest year on record. The European Center for Medium-Range Forecasts (ECMRF) found that the worldwide temperature in 2023 was 1.5°F above the historical average from 1960-2022. When the ECMRF separated over-ocean and land-surface temperatures, the land-surface temperature has risen an alarming 2.23°F above the 1960-2022 average.

Global average anomalies: Air-over-land, air-over-oceans, sea-surface and air-entire planet (Graph from the SOA Research Institute’s Actuarial Weather Extreme Series: 2023 Was the Hottest Year on Record)

To gauge how risk professionals and consumers across demographics perceive extreme-weather events, the Society of Actuaries (SOA) Research Institute conducted several surveys in 2023. The responses indicate an intensifying concern about extreme weather, as it is more directly impacting people’s daily lives.

As pandemic worries lessen, risk managers focus on extreme weather

Each year, the SOA Research Institute conducts its annual survey of risk managers across the globe about what they considered to be the top emerging risks; climate has dominated the list for the past five years. In 2023, risk managers again chose climate change by a large margin — with disruptive technology coming in a distant second.

Risk managers’ choices for top emerging risk in 2023 (Graph from the SOA Research Institute’s 17th Annual Survey of Emerging Risks — Key Findings)

Additionally, in light of the extreme weather events in 2023, it isn’t surprising that natural catastrophes surged as an emerging risk. And when risk managers were asked to provide three combinations of two risks, natural disasters were the risk chosen most often as part of those combinations — hitting new highs as shown in the graph below:

Natural catastrophes: Severe weather (except tropical storms); historical results of risk manager responses, 2009-2023 (Graph from the SOA Research Institute’s 17th Annual Survey of Emerging Risks — Key Findings)

Feeling impacts of extreme weather in the US

In June 2023, the SOA Research Institute conducted an online survey of 2,000 US respondents; and the majority reported that extreme-weather events — including hurricanes, tornadoes, heatwaves, wildfires and flooding — have had negative impacts on their feelings of general safety (65 percent), communities (58 percent), personal health (53 percent), and property (51 percent).

Additionally, respondents reported the following health effects:

• Two in five (42 percent) said that it has caused short-term injury and/or illness.

• Over one-fifth (23 percent) reported extreme weather events have caused complications to existing chronic conditions.

• 15 percent reported extreme weather events caused long-term injury and/or a chronic condition.

Taking a closer look at health impacts by region and ethnicity, survey findings revealed that respondents from the US West (58 percent) were the most likely to note health impacts due to extreme weather. They were closely followed by the US Northeast (56 percent), the US South (53 percent) and the US Midwest (47 percent). Furthermore, 70 percent of Asian Americans cited health impacts, along with 62 percent of Hispanic/Latino Americans and 57 percent of African Americans — all higher than white Americans at 52 percent.

Additionally, 41 percent of US adults surveyed expect climate change to negatively affect their health over the next one to five years — with 11 percent expecting that negative impact to be significant.

“The research has highlighted the impacts of extreme weather events and trends,” said Robert Montgomery, Project Manager of the SOA Research Institute Catastrophe and Climate Strategic Research Program. “An understanding of climate-risk trends can help drive consumer choices — such as where to live, what types of materials to build with, and what infrastructure to develop and energy to rely on.”

The generational divide in sustainable investing

Extreme-weather events are also impacting investment decisions. 35 percent of respondents to the 2023 consumer survey made investments or considered investing in companies involved in making sustainable improvements to the environment. However, financial considerations based on sustainability show generational differences.

Below is the percentage of respondents by generation who have invested or are considering investing in companies making environmentally sustainable improvements:

• 47 percent of Gen Zers (aged 18 – 25)

• 52 percent of Millennials (aged 26 – 42)

• 33 percent of Gen Xers (aged 43 – 57)

• 15 percent of Baby Boomers (aged 58 – 76)

• 16 percent of the Silent Generation (aged 77+)

For more information and to download other SOA Research Institute climate risk research, visit the Catastrophe and Climate Strategic Research page. You can also download the Climate Risk Consumer Survey Report for more findings on perceptions of climate change’s impacts in the US.