Climate Risk in Focus: How Insurance Leaders See Their Greatest Exposures Emerging

As part of our biweekly microsurvey series, we asked our Insurance150 audience to share their perspective on one key question:

“Which aspect of climate risk is most pressing for your organization today — where do you see the greatest exposure emerging?”

This question, simple on the surface, revealed nuanced differences across roles and market verticals — differences that speak volumes about how the industry is prioritizing adaptation, disclosure, and resilience.

Survey Demographics

Before diving into insights, it’s worth understanding who participated in this survey. The sample included 63 senior professionals spanning insurers, investment firms, banks, and consultants.

Roughly 29% of respondents were Managing Directors, while C-Suite executives, VPs, and others each represented about 24%. This distribution offers a balanced view from leadership across operational, financial, and strategic functions — the very mix needed to understand climate risk holistically.

In terms of industry representation, investors (48%) formed the largest group, followed by insurers (33%), with consultants and bankers each contributing 9.5%. This mix underscores how climate exposure is not confined to insurance operations — it extends across capital providers, intermediaries, and advisory networks shaping the sector’s response to environmental risk.

Insights: Where the Industry Sees Its Greatest Exposure

When asked to identify which aspect of climate risk is most pressing, respondents’ views diverged by role and sector — revealing different perceptions of urgency and exposure.

Across all respondents, the leading concerns were:

• Transition risks (38%) — the potential for policy, regulation, and energy-market shifts to disrupt operations or valuations.
  

• Physical risks (33%) — increasingly frequent and severe weather-related losses.
  

• Reputational risks (24%), and
  

• Liability risks (5%) related to climate litigation or greenwashing.

These topline numbers paint a clear picture: the market is more concerned about how to transition than how to endure. As insurers and financial actors navigate disclosure requirements (like IFRS S2 or the EU’s CSRD) and evolving carbon policies, strategic alignment with sustainability frameworks has become as material as loss modeling.

Executive-Level Perspectives

At the C-Suite level, 60% of leaders flagged transition risk as their top concern. This reflects the pressure executives face from regulators and shareholders alike to set credible decarbonization targets, assess stranded-asset exposure, and anticipate changes in underwriting standards.

Managing Directors, on the other hand, displayed a more balanced view: one-third cited reputational risk and another third transition risk, with smaller but notable shares naming physical and liability risks. This mix suggests that operational leaders are equally attuned to client expectations and ESG positioning — a signal that sustainability communications are no longer purely a boardroom issue.

Meanwhile, VPs and “Other” roles showed the strongest concern for physical risks (60%), likely reflecting their proximity to day-to-day exposure management, catastrophe modeling, and claims operations.

Market Vertical Perspectives

Breaking results down by vertical adds another layer of insight:

• Bankers stood out with 50% citing transition risk and 50% physical risk, reflecting the dual exposure they face through financed emissions and credit risk in climate-sensitive sectors.
  

• Insurers skewed heavily toward reputational (43%) and transition (29%) risks, indicating growing concern about ESG scrutiny, ratings, and stakeholder expectations.
  

• Investors, for their part, appeared evenly distributed: 40% physical, 30% transition, and smaller shares for reputational and liability risks — a pattern consistent with portfolio diversification and the growing materiality of climate resilience in asset management.

The fact that liability risk remains minimal across all groups (5–10%) is telling. While climate litigation is gaining global attention, most firms appear to see it as a secondary — or lagging — exposure compared to transition pressures and weather volatility. This may soon change as greenwashing claims and fiduciary-duty challenges expand across jurisdictions.

Conclusion: Transition Risk as the Strategic Frontier

These findings echo many of the themes from our recent analysis, “Climate Transition Risk in Insurance: What Insurers, M&A Teams, and Investors Should Do Next.” (Read More)

The survey reinforces a critical takeaway from that report: transition risk is not just a regulatory or reputational issue — it is a strategic inflection point. Firms that fail to integrate transition pathways into underwriting, investment, and acquisition strategies risk being left behind as capital markets increasingly price climate exposure.

For insurers, this means reassessing capital allocation and product design to support low-carbon transitions while managing accumulation risk. For investors, it implies refining due diligence around ESG credibility and carbon-adjusted returns. And for M&A teams, the implication is clear: climate-aligned consolidation will increasingly define deal value.

As climate disclosure frameworks become standardized and market incentives shift toward transparency, those who proactively manage transition exposure will not only mitigate downside risk — they’ll position themselves for competitive advantage in a decarbonizing economy.

In short, the data from this microsurvey reinforces what our broader research has shown: the insurance ecosystem’s next frontier is transition readiness. The challenge is not just weathering the storm — it’s navigating the transformation.