Why climate change could reshape global financial stability
Climate risk is no longer a distant threat — it’s becoming a financial accelerant. According to new BCG analysis, even small increases in global warming can push markets, insurers, and entire economies past nonlinear tipping points, creating abrupt shifts in asset values and balance-sheet exposure.
For FIs , the implications are clear:
- Physical and transition risks will increasingly interact, amplifying shocks
- Traditional models that assume smooth, gradual change are now dangerously outdated
- The real vulnerability lies not only in climate itself, but in the speed at which markets reprice risk once thresholds are crossed
Preparing for this new era requires deeper scenario planning, dynamic monitoring, and technology that helps financial institutions adapt ahead of the curve. Because once systems tip, there’s no returning to business as usual.
Source: https://www.bcg.com/publications/2025/climate-change-trigger-financial-tipping-points
