Global | Climate Scenarios: From Uncertainty to Risks

Summary

Unprecedented uncertainty highlights the importance of scenario-based analysis for assessing climate risks, especially in the short term. Climate risk scenarios developed by leading institutions can serve as a valuable starting point to illustrate potential economic impacts.

Key points

• Key points:
• Global economic policy uncertainty has reached its highest level due to U.S. mercantilism, use of tariffs, and chaotic policy announcements, complicating traditional economic forecasting.
• Scenario-based analysis is essential for managing uncertainty and turning it into risk, especially in relation to climate change and disruptions in global governance.
• Leading institutions have identified specific climate risk scenarios built around uncertainty over climate policies, insufficient responses to climate disasters, or geopolitical tensions disrupting global supply chains — each with different economic consequences.
• Scenario analysis allows economic policymakers or financial institutions to prepare for alternative futures, thereby strengthening risk management and decision-making.

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