Climate Risk and Insurance - Raghavendra Rau
Gresham College
33,019 views
00:00 // Introduction: Climate Risk, Geopolitics & Finance Explained
02:25 // Two Families, One Hidden Problem: Insurance & Energy Shocks
03:00 // The Core Issue: How Risk Is Priced in Modern Markets
03:25 // The Magic of Insurance Pooling & The Law of Large Numbers
09:00 // How Energy Suppliers Hedge Risk (And Why It Failed)
11:00 // What Happens When Risk Becomes Correlated? (Domino Effect)
14:45 // Real-World Example: UK Storms & £500M in Claims
15:40 // The 2021 Energy Crisis & Supplier Collapses Explained
18:10 // Thin Capital Buffers & Why Companies Go Bankrupt
21:20 // Climate Change = Correlated Weather Risk
23:30 // Why “1-in-100-Year” Models No Longer Work
25:00 // Geopolitical Risk: Russia, Gas & Energy Price Spikes
27:00 // The Climate–Geopolitics Feedback Loop
30:50 // Climate Tipping Points & Sudden System Shocks
34:30 // The Sulfur Paradox: Clean Air, Faster Warming?
37:00 // Geoengineering Risks & Global Conflict Scenarios
41:40 // Insurance Crisis: California, Australia & UK Flood Zones
46:20 // UK Energy Market Collapse & Who Paid the Cost
48:30 // Solutions: Resilience, Parametric Insurance & Catastrophe Bonds
55:00 // Policy Choices: Pricing Risk Fairly in a Correlated World
Watch the Q&A session here: Q&A: Climate Risk and Insurance - Raghave...
Why did coastal homeowners lose insurance while UK energy bills spiked after Russia’s invasion? Because risks started moving together. In this lecture, I show how climate extremes and geopolitics create synchronized shocks that overwhelm insurers and energy suppliers, pushing up premiums and bills. I discuss the basics of risk pooling, why it breaks under correlation, and what realistic fixes look like—from parametric policies and better building standards to smarter hedging and targeted support.
This lecture was recorded by Raghavendra Rau on the 18th of February 2026 at Barnard's Inn Hall, London
Raghu is the Mercers School Memorial Professor of Business
He is also the Sir Evelyn de Rothschild Professor of Finance at Cambridge Judge Business School.
The transcript of the lecture is available from the Gresham College website: https://www.gresham.ac.uk/watch-now/c...
Gresham College has offered free public lectures for over 400 years, thanks to the generosity of our supporters. There are currently over 2,500 lectures free to access. We believe that everyone should have the opportunity to learn from some of the greatest minds. To support Gresham College's mission, please consider making a donation: https://www.gresham.ac.uk/get-involve...
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Climate Risk and Insurance - Raghavendra Rau
Gresham College
33,019 views
00:00 // Introduction: Climate Risk, Geopolitics & Finance Explained
02:25 // Two Families, One Hidden Problem: Insurance & Energy Shocks
03:00 // The Core Issue: How Risk Is Priced in Modern Markets
03:25 // The Magic of Insurance Pooling & The Law of Large Numbers
09:00 // How Energy Suppliers Hedge Risk (And Why It Failed)
11:00 // What Happens When Risk Becomes Correlated? (Domino Effect)
14:45 // Real-World Example: UK Storms & £500M in Claims
15:40 // The 2021 Energy Crisis & Supplier Collapses Explained
18:10 // Thin Capital Buffers & Why Companies Go Bankrupt
21:20 // Climate Change = Correlated Weather Risk
23:30 // Why “1-in-100-Year” Models No Longer Work
25:00 // Geopolitical Risk: Russia, Gas & Energy Price Spikes
27:00 // The Climate–Geopolitics Feedback Loop
30:50 // Climate Tipping Points & Sudden System Shocks
34:30 // The Sulfur Paradox: Clean Air, Faster Warming?
37:00 // Geoengineering Risks & Global Conflict Scenarios
41:40 // Insurance Crisis: California, Australia & UK Flood Zones
46:20 // UK Energy Market Collapse & Who Paid the Cost
48:30 // Solutions: Resilience, Parametric Insurance & Catastrophe Bonds
55:00 // Policy Choices: Pricing Risk Fairly in a Correlated World
Watch the Q&A session here: Q&A: Climate Risk and Insurance - Raghave...
Why did coastal homeowners lose insurance while UK energy bills spiked after Russia’s invasion? Because risks started moving together. In this lecture, I show how climate extremes and geopolitics create synchronized shocks that overwhelm insurers and energy suppliers, pushing up premiums and bills. I discuss the basics of risk pooling, why it breaks under correlation, and what realistic fixes look like—from parametric policies and better building standards to smarter hedging and targeted support.
This lecture was recorded by Raghavendra Rau on the 18th of February 2026 at Barnard's Inn Hall, London
Raghu is the Mercers School Memorial Professor of Business
He is also the Sir Evelyn de Rothschild Professor of Finance at Cambridge Judge Business School.
The transcript of the lecture is available from the Gresham College website: https://www.gresham.ac.uk/watch-now/c...
Gresham College has offered free public lectures for over 400 years, thanks to the generosity of our supporters. There are currently over 2,500 lectures free to access. We believe that everyone should have the opportunity to learn from some of the greatest minds. To support Gresham College's mission, please consider making a donation: https://www.gresham.ac.uk/get-involve...
Website: https://gresham.ac.uk
X: https://x.com/GreshamCollege
Facebook: Facebook: greshamcollege
Instagram: Instagram: greshamcollege
Bluesky: https://bsky.app/profile/greshamcolle...
TikTok: TikTok: greshamcollege
Support Us: https://www.gresham.ac.uk/get-involve...