window of opportunity to take preventative and proactive action may be closing faster than we realise. impacts from damage are alleviated by insurance. insurers play a critical role in society, providing individuals and businesses with security and confidence in their daily lives and activities. the insurance market, however, is facing major challenges. without adaptation, rising physical risks have clear implications for insurers and policyholders : more frequent and severe events will bring more claims, higher premiums and lower insurance coverage in risky areas. furthermore, diversifying country - level risks through the reinsurance market is becoming more costly and restrictive17 given that climate risks are rising in many regions simultaneously. recent large increases in household insurance costs in the united states could be a warning sign for other regions. while it is important to acknowledge these challenges, it is equally important to highlight that there are still opportunities for insurers to continue to play a crucial societal role, create sustainable business models, and remain relevant in this fast - changing world. in areas where defences are neither economically or technically feasible, or in situations where defence infrastructure will take many years to complete, lessons from international policy innovations may help prevent a squeeze on underwriting here. consideration could be given to interim measures that could mitigate flood risk until defence infrastructure is in place. reducing risk through adaptation allows insurers to retain a risk - based pricing approach18 and potentially expand risk appetite and offers of insurance. this might be achieved through recognition of measures put in place by policyholders to lessen the risk. similarly, public - private collaboration, whether it is through provision of expertise or another mechanism such as a partnership, also enables insurers to retain a risk - based approach to pricing. it may be possible to set up risk sharing / solidarity schemes where funds are pooled to support insurance provision in risky areas. adaptation in the financial sector the financial sector must also adapt from within, which means embedding climate risks into our models, systems, processes and policies. climate change has forced the financial sector to consider risk over considerably longer time horizons. for example, up until very recently, a bank stress test would explore resilience to economic shocks over the course of a typical business cycle. with climate change, we are now looking at risk over decades rather than years. this brings new challenges, and has required new data collections and new models. the financial sector ’ s information environment is also adapting to the transition, and we appear to be in the midst of a

technologies, and these investments will probably require external financing. for the financial sector, these ‘ transition risks ’ encompass the negative changes to business costs, revenues and profits as a result of future climate - related shifts in consumer or investor sentiment or of government policy. like physical risks, transition risks are also unevenly spread, and will be higher in sectors with carbon intensive inputs, processes or outputs. some highly intensive sectors will be required to make very dramatic changes to their business models if they are to survive in the new, sustainable economy. there will also be winners in the coming decades. sectors and countries that offer loweremission products and services will be more resilient. transition risk differences are prevalent for households, too : a family living in an apartment within walking distance to services will have a considerably less expensive transition than one in a large, isolated, detached house. it is important that transition supports consider these cost inequalities if we are to bring everyone along on this journey, although we must accept that some types of business models and assets may no longer be viable commercially. planning for uncertainty to plan a safe path through the 21st century we must forecast risk. while the world will reach net zero this century, there is considerable uncertainty regarding when exactly. it is, however, certain that the frequency and severity of weather and climaterelated damages will increase over the next forty or so years, and sectors and communities will need to adapt to these changes. how much we need to adapt to physical risks depends on which damage pathway the world is on, which of course depends on emission reductions outside our borders. while ireland ’ s greenhouse gas emissions per capita puts us in the top fifth of most emitting nations, our small population and land area means we play a minor role in total global emissions ( about one tenth of one percent in 2022 ). 5 ireland is therefore a ‘ physical risk taker ’ and we must monitor global trends to understand our own future physical risks. moreover such statistics should not be used to reduce the urgency of meeting our own mitigation targets : the net zero objective will, regardless of what happens abroad, decouple our economy from fossil fuels and put us on the lowest risk pathway. over the coming decades, it is of course vital that all countries push towards targets together, if we are to avoid a very dangerous ‘ prisoner ’ s emissions dilemma ’ where the pursuit of individual country gains leads to worse long - run outcomes for all. limited past global progress – both