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You might think that everyone, including business decision-makers, has been talking about climate risks non-stop for the last couple of years. That may be, but if climate risks are being significantly under-estimated despite all of that talk, the steps being with undertaken with the goal of managing those risks may not only be too little, too late, but may be fundamentally misguided.

There is a lot of evidence to suggest that from the Intergovernmental Panel on Climate Change on down, many if not most climate risk assessments today are downplaying or entirely missing potentially important sources of climate risk. That’s really not surprising given the characteristics of climate change, in particular how fast relevant variables are shifting, as well as human nature when it comes to perceiving and responding such risks. Some of the key variables likely to result in under-estimating climate risks include:

  • Climate Change Probability Distributions Are Long-Tailed/Fat-Tailed
  • Climate Change Probability Distributions Are Actively Shifting
  • Climate Change Itself May be Accelerating
  • Tipping Points Are Largely Absent from Climate Risk Assessments
  • Systemic Climate Risks Are Under-Valued
  • Climate Models Are Commonly Risk-Neutral as Opposed to Risk-Adverse
  • We Mistakenly Pay More Attention to What We Can Measure Than What We Can’t

Based on these variables, it is quite possible that in many cases societal and business climate risk assessments are missing a substantial fraction of, if not the majority of, climate risk. In making this statement we are not suggesting we are better able to predict the future than anyone else, and we’re not saying that all of the outcomes discussed here will come to pass in conventionally business-relevant time frames, or should be considered material in business decision-making. But we are suggesting that if these and other variables are being downplayed in or are missing altogether from risk assessments, A LOT of climate risk might be unaccounted for. And that’s a problem.

Our Two Introductory Videos

Underestimating climate risk - an overview

A short (6.5 min) topical overview video
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Topic Video - Underestimating Climate Change

A short (8 min) video introducing you to some of the Climate Web’s most relevant topical resources for digging into climate risks.
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The Roadmap

For purposes of this Topical Roadmap we’re going to use the following definition of risk:

Risk = Probability x Consequence

Risk is a fascinating topic, and we’ve assembled a GIF of quotes from risk experts that can help set the stage for thinking about under-estimating climate risks. Note the focus on the less probable over the more probable in assessing risk.

Characterizing Risk GIF

The next GIF starts off with former Secretary of Defense Donald Rumsfeld’ss famous quote, and then gets into a series of quotes having to do with the fact that, for better or worse, we face real psychological challenges when it comes to grappling with known unknowns, much less unknown unknowns!

We Downplay Uncertainty GIF

Long-Tail and Fat-Tail Probability Distributions

The relevant definition of risk for our purposes is “Risk = Consequence x Probability.” We’ve visualized a climate consequences probability distribution below. Don’t get too hung up on the precise shape of the probability distribution; what’s important is that the distribution can be split into two parts: expected risks (higher probability, lower consequence), and fat-tail or long-tail risks (lower probability, higher consequence) outcomes. Note that this is NOT a climate risk probability distribution, since risks (probability x consequence) will tend to rise rapidly as you move farther out on the consequences axis toward “black swan” events.


The problem in under-estimating climate risks often comes from focusing primarily on the “expected risk” part of the probability distribution, and much less so on the “grey rhino” and “black swan” parts of the distribution. As you can see from the slide shown here, there are many grey-rhino variables that could be missed by focusing on “expected risks.” And that’s without even trying to identify some of the black swan risks.


There are a number of reports in particular that to a good job of exploring long-tailed risk issues. Through the links below you can access the reports themselves, as well as a small number of key extracted ideas and graphics. These are by no means the only particularly relevant materials in the Climate Web, and we welcome suggestions for others we should highlight via this roadmap.

Each of the GIFs below pull together selected extracts from a key report, linked to below the GIF. All the extracts for each report (and in some cases quite a few more) are available through the link just below the GIF if you want to explore them more systematically. Obviously the literature relevant to under-estimating climate risk is far larger than reflected in these GIFs, and we’ll continue to add materials to this page.

Disaster Alley GIF

2017 Dunlop_Disaster Alley Climate Change Conflict and Risk

2018 Spratt White Lies Beneath GIF

2018 Spratt_What Lies Beneath - the Understatement of Existential Climate Risk

2019 Spratt Existential GIF

2019 Spratt_Existential climate-related security risk A scenario approach

Other very relevant reports and papers include:

In this Topical Roadmap now we’ll dig deeper into relevant Climate Web resources through the story and links organized below.

There are a bunch of psychological and other reasons we tend to focus on “expected risk,” and some key parts of the relevant literature are listed below (with links into the Climate Web), with some extracted thoughts below that.

Changing Probability Distributions

The Roadmap so far on the fact that we have been neglecting a lot of if not most of the overall climate risk by focusing on the “expected” portion of the climate change probability distribution. Compounding that problem, however, is the reality that the climate change probability distribution is also shifting due to climate change.

Accelerating Climate Change and Tipping Points

Some of these variables aren’t even factored into most climate models upon with climate risk assessments are based. Climate change tipping points, for example, are generally not factored into climate models because scientists don’t know enough about their “when” and “how.” But the likelihood of triggering such tipping points is increasing as climate change progresses, and will increase further if climate change is in fact accelerating.


Further compounding the problem of under-estimated climate risks is the apparent acceleration of climate change itself.

Systemic Climate Risk

Another commonly under-valued risk variables is “systemic climate risk.” Systemic risk used to be a term of art in the financial sector, but it is increasingly being recognized that climate change could trigger systemic risk events in its own right, from global food shortages to pandemics and even global conflict. Systemic climate risks are key because they can’t be managed through conventional business risk management tools, e.g. diversification and resilience, and are arguably becoming the risk elephant in the room.


Systemic risk is relatively new to the climate change conversation, although not to the financial sector generally. Why the idea of systemic risk should be applied to climate change To the extent that systemic risks are under-weighted or ignored in societal and business decision-making, it’s a significant source of under-estimated risk. And because the systemic risk conversation is so new, it’s safe to say that it is not well factored into risk assessments and decision-making.

Risk Adversity

The variables introduces previously in this Topical Roadmap focus on the actual consequences associated with the long- or fat-tail of the risk distribution. This variable focuses on the psychology of how we perceive climate risks, and the fact that we tend to underweight risky futures in our decision-making.

  • First, it’s important to recognize just how much uncertainty exists with respect to future climate change outcomes, and that most of that uncertainty is associated with the “more than expected” side of the probability distribution.

  • You can explore the topics of known unknowns and unknowns in the Climate Web, including through this collection of sources S - Climate Uncertainties Unknowns as well as a couple Insights Pages that pull together relevant thinking. Climate Known Unknowns Climate Unknown Unknowns

  • The consequences of climate change are potentially so severe Why a "risk averse response?" that the absence of a substantial risk response on the part of societal decision-makers could be seen as surprising. But a lot of work has gone into understanding the reasons Why AREN'T we responding in a risk averse manner?

  • It doesn’t help that we We are over-confident in predicting the future, which is one of the things that is contributing to our under-estimation of climate risks. Nor does it help that we tend to Discount the Future so severely.

  • One of the best examples of our failure to think risk-adversely involves sea level rise. How should you interpret prevailing seal level rise forecasts? Interpreting Sea Level Rise Risk

  • What would a risk-adverse response to climate change look like? That’s an enormous topic in its own right, but we can explore one slice of the question of risk-neutral vs. risk-adverse framing via the Social Cost of Carbon. A Risk Averse SCC

To Rethink Climate Risks

The Climate Web is structured to support climate risk assessment and re-assessment in a number of ways:

  • Climate Assumptions Audits help you identify and challenge assumptions that may characterize organizational thinking around climate topics.

  • Business Premortems are a story-telling technique that can help open up decision-makers’ minds to futures that they may not have thought about.

  • Scenario Planning for climate change is critical, and should often encompass a significantly wider range of outcomes that a lot of scenario planning does today. The Climate Web is specifically structured to support sector and company-appropriate scenario planning.

You can utilize the Climate Web on your own, or the Climatographers can help you utilize it Web via customized briefings and Roadmaps, and even Ebooks based on Climate Web content. We can help you take instant advantage of thousands of hours of analysis and knowledge curation across not only the topics covered in this Roadmap, but hundreds of others.