Financial risks stemming from climate-related natural disasters are projected to soar from $7.8 trillion today to $28.3 trillion in global GDP by 2050, according to a new report by the London Stock Exchange Group (LSEG). The report warns that worsening climate impacts will expose 839 million people to heightened financial vulnerability by mid-century — up from 155 million in 2025.
The analysis, covering 4,416 regions across major economies including the U.S., China, Japan, Germany, the UK, France, Italy, and Turkey, models a scenario where rapid economic growth and insufficient climate mitigation push global temperatures 2.4°C above pre-industrial levels by 2050. This would amplify the frequency and severity of hurricanes, floods, heatwaves, wildfires, and water stress.
In the United States, an additional 25 million people and $2.7 trillion in GDP are expected to face exposure to Category 1 or stronger hurricanes at least once a decade. The number of high-risk counties north of Delaware could more than double — from 24 to 62 — encompassing the New York and Philadelphia metropolitan regions. Flood risk is projected to rise nearly 300%, affecting $2.4 trillion in U.S. GDP, particularly in areas along the Mississippi River and the New York metro region.
Extreme heat will also expand significantly. By 2050, 145 regions are expected to experience 30 or more days above 40°C, including large parts of Texas and Arizona. Rising temperatures will intensify water stress in 670 regions generating $6.9 trillion in GDP, home to 244 million people. Meanwhile, wildfire exposure is set to grow by 16.4 million people, with particularly severe risk in California, Montana, Wyoming, and parts of the southeastern U.S.
LSEG’s report also highlights economic ripple effects, including infrastructure damage, supply chain disruption, and bond downgrades. Insurance markets are already under strain, with a global protection gap — the share of losses not covered by insurance — reaching 60% in 2024.
“This trend suggests that insurance availability and pricing may become increasingly volatile in regions facing escalating climate hazards,” said Kieran Brophy, Research Lead for Sovereign Climate at LSEG. “However, future outcomes will depend on regulatory responses and insurers’ strategies.”
The findings underscore growing concerns about the intersection of climate risk, financial stability, and economic resilience, as more regions confront the mounting costs of a warming world.
