From climate trend to risk reality
In 2015, 196 parties convened at the United Nations Climate Change Conference to negotiate an international treaty designed to tackle what was then recognized as an impending crisis. Known as the Paris Agreement, the treaty was signed the following year. Among a series of commitments encompassing climate mitigation, adaption, and finance, the Paris Agreement included a core pledge to limit global temperatures to 1.5 degrees above pre-industrial levels. Above all, the treaty signaled a willingness and desire shared among parties across the globe to tackle the climate crisis.
Ten years later, that commitment is wavering. The Paris Agreement has, on the one hand, led to a substantial reduction in the projected increase of global surface temperatures, from a pre-2015 path of 3.5–4.8-degrees, down to roughly 2.3–2.9-degrees. The drivers of this include reductions to fossil fuel emissions, and the embrace of cleaner, renewable energy sources – both provisions outlined in the original treaty. Yet, at the same time, the globe remains woefully short of its 1.5-degree target – a factor that is likely to make temporary or permanent overshoot inevitable. Meanwhile, in the discourse around climate change, its consequences continue to exist on the horizon: By acting today, we can mitigate impacts in the future.
But this thinking can only carry us so far. Few can argue that recent years have represented a step-change, the evolving climate imposing itself upon us with increasing force. In January 2025, wildfires tore through much of Southern California, as a prolonged drought combined with low-humidity conditions and a build-up of vegetation to burn more than 55,000 acres of land, destroy homes, and claim at least 31 lives. And more recently, in late August 2026, the collapse of a glacial ice sheet on the Nepal-Tibet border region prompted a major flash flood and mudslide, causing further loss of life, and leaving upwards of 4,000 unaccounted for.
From ‘warming’ to ‘heating’
For decades, ‘global warming’ (along with the broader ‘climate change’) has been the preferred term to describe this phenomenon – by which human-generated greenhouse gas emissions trap additional heat in the Earth’s atmosphere, leading to a sustained rise in average surface temperatures. But as temperatures soar, ‘warming’ feels increasingly inadequate. Driven by above-average land temperatures, and record highs across every major ocean basin, 2026 has already seen the joint-hottest July on record – more than two degrees Fahrenheit (1.18°C) above the 20th-century average, tied only with the summer of 2024. The World Meteorological Association (WMO) proposes an 86% chance that one year between 2026 and 2030 will soon claim that record outright.
To convey the scale, and the immediacy of the challenge facing the planet, it is therefore necessary to reach for new terms. ‘Global heating’, the subject of this report, is far from a new term – scientists have been arguing its merits for years. Yet, the severity of present-day climate impacts makes a fresh case for its adoption as a means to articulate the challenge facing individuals, businesses, and governments around the world. Weather- and climate-related extremes caused an estimated €822bn in economic losses across the EU between 1980 and 2024. Around a quarter of that damage occurred during the last four years alone, highlighting the growing pace at which climate-related losses are accumulating.
Much like its predecessors, global heating does not mean that every region of the globe will get hotter, nor are its effects limited to extreme heat. Within this report, we explore the various implications of a hotter globe, including wildfires, floods, hurricanes, and storm surges, and the consequences for industry, agriculture, and individuals. In determining loss, these events intersect with other human factors – from the location, value, and quality of affected assets to the effectiveness of the measures in place to protect them. But whatever the circumstances, global heating is the backdrop against which new business risks will manifest.
Global heating is moving beyond a future environmental concern, and becoming a present-day business reality.
Protection, risk, and resilience
As the physical consequences of global heating become increasingly visible, so too do their economic costs. Natural catastrophe losses have risen substantially in recent decades, driven not only by changes in weather patterns, but also by the growing concentration of people, assets, and infrastructure in exposed locations. Across much of the world, organizations are now confronting climate-related risks that are both more frequent and more complex than those of previous generations.
These changes are also reshaping the insurance market itself. As catastrophe losses increase, insurers and reinsurers are applying greater scrutiny to risk quality, resilience measures, and long-term exposure. In some regions, this has resulted in higher premiums, larger deductibles, tighter sub-limits, and reduced capacity for the most exposed risks. For businesses, the implications extend beyond insurance costs alone. Increasingly, the availability and affordability of insurance can act as a signal of underlying risk, influencing access to finance, investment decisions, and long-term project viability.
In this respect, global heating is moving beyond a future environmental concern, and becoming a present-day business reality. Historical weather patterns no longer offer a reliable guide to future conditions, while climate-related disruption is no longer confined to isolated events. The challenge is increasingly one of adaptation: understanding where exposures exist, reducing vulnerability where possible, and building resilience into long-term planning.
This report explores how global heating is already shaping risk across sectors, from energy, agriculture and critical infrastructure to supply chains, property and natural catastrophe exposures. It also examines how organizations, insurers and risk managers are responding to a world in which climate volatility is becoming a permanent feature of the operating environment.