The loss of biodiversity threatens the health of ecosystems that provide fundamental services to the economy, including animal pollination of food crops, natural water treatment and fertile soil. In its Global Risks Report 2020, the World Economic Forum ranked biodiversity loss as one of its top five global risks in terms of both likelihood and impact. The Swiss Re Institute recently calculated that 55% of global GDP is dependent on biodiversity and ecosystem services.
These important risks should be taken into account across the finance sector, where investments and insurance are the backbone of economic growth and resilience. The management and measurement of these risks is a field where actuaries (as the profession focussed on financial risk) are well placed to contribute. In addition, the use of financial risk techniques may offer other opportunities to manage biodiversity risk more widely. However, no current agreed method exists to calculate these risks.
This PhD will explore these issues and map out how biodiversity risks could be material to the finance sector as well as identify opportunities where actuarial skills could be applied. It will also assess the role that natural capital as a framing concept, as well as natural capital valuation/financialisation, might have on increasing or reducing this risk, as this framing has been proposed for the profession (and by the UK Government).
The project may encompass a variety of social science approaches. It is anticipated methods will include interviews, observations (anthropology), field notes and workshops. If appropriate and available case studies of previous biodiversity loss or natural capital management (for example oil spills and compensation payments or payments for ecosystem services) will be explored, especially where quantification of biodiversity has led to positive or negative outcomes.
The PhD is jointly supervised by SwissRe (the second largest reinsurance company globally) which enables access to data and expertise. It is also linked with the Institute & Faculty of Actuaries through the lead supervisor who is an Honorary Fellow of the Institute and currently chairs their Biodiversity Working Party.
This scholarships has been developed in conjunction with The DTA Future Societies programme, which will support solutions-driven research that tackles the world’s most pressing challenges, with projects addressing the UN’s Sustainable Development Goals (SDGs).
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