Harnessing nature for resilience

Our corporate site Contact us

Unlocking the power of nature-based solutions in climate risk management

As the effects of climate change intensify, the urgency to build resilience against physical climate risks — such as floods, hurricanes, droughts, and extreme heat — has never been greater. Meanwhile, natural ecosystems that have historically served as the first line of defense are deteriorating, threatening biodiversity and the protective benefits they provide.

The Global Risks Report 2026, developed by the World Economic Forum, ranked extreme weather events and biodiversity loss and ecosystem collapse as the top risks globally over the next 10-year period.

Nature-based solutions (NBS) are gaining traction to manage this double challenge, as part of a holistic climate risk management strategy. These solutions emphasize the need to work with nature — not against it — to protect communities, assets, and economies. Looking ahead, the focus will be on how organizations can begin harnessing nature to build resilience and how they can scale financing for NBS effectively.

Addressing a dual challenge: Climate risk and nature loss

The dual challenge lies in increasing resilience to climate risks while addressing the decline of natural ecosystems. NBS work to address both challenges simultaneously by implementing measures to protect, conserve, restore, and manage natural ecosystems.

For example, actions that contribute to maintaining a healthy forest ecosystem can reduce the risk of landslides and flooding by stabilizing soil with their root systems and absorbing excess rainfall. Additionally, forests support a vast array of plant and animal species, and they capture and store large amounts of carbon dioxide. These benefits protect communities and infrastructure, in turn enhancing climate resilience.

However, challenges remain in scaling and financing NBS. Advancing standardized methodologies and improving data quality are critical to facilitating the flow of public and private capital into sustainable, nature-based protection interventions.

Integrating green and gray infrastructure

Combining NBS with engineered infrastructure can be a strong start to developing a powerful, integrated defense system.

Layered protection strategies that use green (nature-based) and gray (engineered) infrastructure are increasingly valuable to climate resilience. Natural buffers such as wetlands, marshes, dunes, and urban green infrastructure can reduce flood surges, dissipate wave energy, and manage stormwater, complementing traditional engineered defenses like levees and flood walls.

Such hybrid approaches can deliver co-benefits including biodiversity enhancement, urban heat relief, and carbon sequestration. Some projects envision pairing engineered coastal defenses with ecological habitats to protect densely populated, high-value areas, while urban and river corridor restoration efforts can help manage inland flood risks.

Scaling nature finance

With over half of the world’s GDP dependent on nature, closing the investment gap to meet biodiversity and conservation goals is imperative — and nature finance is earning recognition as a critical component of sustainable finance.

A crucial step towards mainstreaming NBS is quantifying their protective value in financial terms. Recent research along Florida’s coastline has demonstrated that natural ecosystems can significantly reduce risk exposures. Even after accounting for other flood risk factors, this study found that the frequency of insurance claims approximately halved in areas of high coastal habitat protection.

The nature finance landscape is multifaceted, encompassing transition instruments like sustainability-linked bonds and direct investments in natural asset companies and environmental credits. Traditional asset classes such as sustainable forestry and agriculture may offer more immediate investable opportunities with attractive returns, while emerging solutions like biodiversity credits and nature technology will require further development and policy support.

A recent example is the UK’s Biodiversity Net Gain (BNG) legislation, which demonstrates significant potential to unlock new funding streams for natural flood risk management. This approach is gaining attention globally, with other regions exploring similar frameworks tailored to their unique risk profiles. From an investor perspective, understanding how these solutions translate into tangible risk reduction and financial returns will be necessary.

Quantifying the benefits of nature-based interventions requires sophisticated models that can accurately factor nature into hazard, exposure, and vulnerability analyses. While it is technically feasible to integrate NBS into risk analytics, it is not yet standard practice. Real-world examples, such as wetland restoration efforts in Louisiana following hurricanes including Katrina, illustrate ongoing efforts to demonstrate nature’s protective value to financiers insurers. However, upgrading modeling tools to reflect these benefits requires substantial investment and collaboration. Beyond risk finance, these analyses also support building the investment case for NBS projects.

How the insurance industry fits into the puzzle

The insurance sector’s engagement with nature is evolving, with promising progress in modeling risk reduction benefits and piloting insurance solutions that incorporate these benefits. Examples include parametric policies supporting forest management to reduce wildfire risk and crop insurance adjustments rewarding sustainable farming practices.

However, challenges remain. Catastrophe models still have work to do in integrating localized nature-based risk reductions, and new insurance products for nature-positive outcomes may face affordability and market viability challenges.

Opportunities exist for insurers to leverage advisory roles, advocate for public investments in nature, and innovate insurance products that support conservation and restoration. Cross-sector collaboration and ensuring equitable access to both nature-based protections and insurance coverage — particularly for under-resourced communities — are important considerations.

Some top-of-mind conversation starters may include:

What role does nature play in making an area insurable or investable?
How can innovative insurance solutions be used to incentivize investment in nature-based solutions?
How quickly can we scale these solutions, given that climate change and nature loss are reinforcing each other, weakening the ecosystems that protect us from floods, wildfires, drought, and extreme weather, and eroding nature’s capacity to absorb emissions?

Bridging public and private capital

Effective financing of nature-based adaptation will require uniting public and private capital. Achieving scale to attract institutional investment, quantifying benefits to build robust business cases, and developing innovative funding models that move beyond grant dependency toward blended finance structures are critical.

Examples include collaborations between local governments and private investors on nature investment projects, as well as integrated flood management initiatives that combine carbon offsetting with flood risk reduction. Aligning incentives across stakeholders — including insurers, banks, investors, and construction firms — creates a supportive ecosystem for scaling nature-based finance.

The path forward

While NBS offer promising opportunities to enhance resilience and create investment opportunities, the field remains nascent. Scaling these solutions requires continued innovation in risk modeling, insurance product design, investment frameworks, and public-private collaboration.

Key priorities include:

Developing standardized methods to quantify and integrate nature’s risk reduction benefits into insurance and investment models
Creating scalable, investable NBS projects that attract institutional capital
Aligning incentives across stakeholders to foster sustainable finance ecosystems
Enhancing policy and regulatory frameworks to support nature finance
Ensuring equitable access to nature-based protections and insurance for vulnerable communities

This is both about valuing nature for its own sake and addressing fundamental climate risks with smart, multi-benefit solutions that harness nature’s power. The growing body of research, pilot projects, and cross-sector initiatives offer a hopeful roadmap for embedding nature into the heart of resilience and climate risk management.

Article

Harnessing nature for resilience

Unlocking the power of nature-based solutions in climate risk management

Addressing a dual challenge: Climate risk and nature loss