Insurance and reinsurance under climate stress: managing systemic risk in global supply chains

The authors of this working paper draw on a literature review and expert consultations with senior climate risk specialists across the European (re)insurance ecosystem to explore how insurance interacts with climate vulnerability in key sectors and supply chains. We also investigate the changing nature of insurance in a world of compounding risk, and outline what this means for economic stability, sectoral preparedness, and future adaptation efforts.

As climate change accelerates, global supply chains – long optimized for efficiency rather than resilience – are increasingly exposed to a rising tide of climate-related disruptions. These shocks are rarely isolated. They cascade across borders and sectors, disrupting production, logistics, and trade in ways that reveal deep systemic vulnerabilities in the arteries of the global economy. At the same time insurance and reinsurance, the financial mechanisms historically relied upon to absorb such shocks, are being tested by the growing complexity, frequency, and severity of climate hazards.