Businesses face growing financial exposure to climate risks, yet many remain focused on short-term economic challenges rather than long-term resilience, according to a new report from specialty insurer Beazley.
Its new report, “Risk & Resilience: Spotlight on Environmental & Climate Risk 2025,” highlighted a disconnect between rising climate-related threats and corporate risk priorities, with significant implications for insurance coverage and financial stability.
Despite a surge in extreme weather events, only 20% of executives rank climate-related catastrophic risk as a top concern. At the same time, 72% report adopting new risk management procedures in response to severe weather, signalling a reactive rather than proactive approach to climate adaptation. Insurers warn that without stronger risk mitigation strategies, businesses could face rising premiums, coverage limitations, or even difficulty securing insurance in high-risk areas.
The report also underscored challenges in the transition to non-carbon energy sources, with 67% of executives struggling to navigate this shift. Yet, concern over energy transition risk is waning, with only 21% identifying it as their greatest environmental risk, down from 23% in 2024.
Meanwhile, regulatory uncertainty remains a factor, with 19% of executives citing non-compliance with environmental, social, and governance (ESG) regulations as a key risk, down from 22% last year.
Paul Bantick, Beazley’s Chief Underwriting Officer, cautioned that businesses may be underestimating the long-term financial impact of climate and environmental risks.
“2024 was marked by numerous Black Swan weather events—once considered rare, they are now becoming the norm,” Bantick said. “Yet, our research shows that executives remain focused on immediate uncertainties, potentially overlooking the larger threat of climate and environmental risks.”
As severe weather events drive up claims costs, the insurance industry is adapting by using climate risk data and developing innovative solutions such as parametric insurance to help businesses manage financial exposure.
But with sustainability investments deprioritized by 73% of executives due to economic uncertainty, insurers warn that businesses failing to act now could face higher costs and increased risk in the years ahead.
