Insuring a Risky World

In “Updating Mental Models of Risk” (Issues, Summer 2025), Rod Schoonover, Daniel P. Aldrich, and Daniel Hoyer frame the current reality of how natural disasters impact communities, going beyond simply describing the increasing frequency and severity of wildfires, windstorms, flooding, and other major events. The authors brilliantly layer in the exacerbating factors that often amplify the impact of natural disasters, such as where people choose to live, how wealth creates a false sense of ability to recover after an event, how global supply chains and economic development can lead to geographically broadened impacts from localized events, and how the political discourse in many countries is increasingly working against measures to curb global climate change and mount effective disaster response.

While it is quite a disturbing set of facts, the authors also present guidance and examples of ways to effect change where and how we still can, citing specific community decisions and actions to aid in resilience and recovery. Their recommendations are especially timely in today’s political climate where real impact is blocked (at best) and negative progress in coordination of prevention and recovery efforts is being felt in many countries (at worst).

As a professional in the insurance industry, the recommendations are especially salient as insurers carry a good share of the burden of the losses when these risks become reality, reinforcing the need for the industry to move further and faster down the path of predicting and preventing losses rather than just responding once they have occurred. This is all the more critical as actual progress in prediction and prevention—not just talk—has largely been muted, especially in the prevention arena.

Insurance offers a unique potential to drive change in building codes and rebuilding decisions, creating incentives for property owners to favor more resilient materials, designs, and locations to create property that is fortified against more of the risk it could face. Insurance could also be a coordinating force with local and state governments to help drive changes in people’s decisions about where to build or live, through the use of free market pricing of coverage (making it too costly to live in areas that are too risky) or coordinating grants and other mechanisms to drive fortification of properties, especially when insurers are already paying to repair or rebuild an impacted building.

Despite the grave nature of the subject matter, and the fact that government seems to be moving away from coordinated policy responses that incentivize behaviors that can lessen the pace and impact of climate change, the authors usefully provide tangible examples of how people can empower themselves to make timely and helpful changes in how they look at and respond to risk.

Bryan Falchuk

According to the great systems thinker Donella Meadows, coauthor of the famous 1972 Limits to Growth report, there are many “leverage points” in systems, which could be highly influential in shifting them to better states. In further work, Meadows helped popularize the “iceberg” model of systems, which posits that the highest point of leverage in a system comprises the values, assumptions, and beliefs that shape it. This is why Rod Schoonover, Daniel Aldrich, and Daniel Hoyer’s essay is so apt. As they argue (and I fully agree), we are still fixated on individual, sector-by-sector, system-by-system risks, and we think about their severities and likelihoods separately. But this two-dimensional representation of risks is inadequate in today’s multidimensional world.

In 2010, when I joined Imperial College London as a research fellow on climate change mitigation, fresh from my UK government experience of working on energy decarbonization, I lectured on the need to reduce greenhouse gas emissions and the options available. I was occasionally interrupted by students asking about the overt focus on climate change, over and above longstanding issues such as soil, river, and air pollution. I always responded that the global, urgent nature of climate change made it the number one environmental challenge. But I have since come to realize that this compartmentalization of issues was highly inappropriate, and probably damaging.

For we cannot think about global challenges, nor the risks that stem from them, as separate. The polycrisis the world is now in signifies not just the multiplicity of risks, but their interconnectedness. Yes, it is incredibly difficult to get up to speed on all the social, economic, and technological challenges of a low-carbon transition. But we won’t make real progress without understanding the geopolitical tensions around the race to secure critical minerals for low-carbon technologies, or without understanding the potentially innovation-accelerating and energy demand-increasing role of artificial intelligence. Many other systems—be they health, social cohesion, food and agriculture, or the integrity of local ecosystems—simply must be considered if we are to craft a coherent, de-risked pathway to a low-carbon future. This is just one reason why I transitioned from a climate and energy focus to a more holistic, systemic focus in my current role at the United Nations Foundation’s Accelerator for Systemic Risk Assessment (ASRA).

New frameworks for assessing systemic risks are required. Along with members of ASRA’s transdisciplinary network (including Daniel Hoyer), we’ve developed one such framework, which has at its core issues of system architectures, including power and vulnerability, the centrality of nature, and the need for deep transformations of systems away from inherently risky states. Our hope is that this framework becomes widely used, at different scales, in different places, and by different organizations—for systemic risk can potentially affect every person, every organization, and indeed every species in the world. This is as broad and all-encompassing as it gets. Our response must start with a profound shift in the mental models we bring to thinking and mitigating risks, to move beyond our siloed treatment of isolated issues.

Ajay Gambhir

Rod Schoonover, Daniel P. Aldrich, and Daniel Hoyer offer a timely and critical intervention into the inadequacy of prevailing mental models for understanding and managing risk in a world of escalating systemic crises. Their articulation of cascading disasters and interdependent vulnerabilities is not only persuasive—it is necessary. As the World Economic Forum’s 2024 Global Risks Report underscores, misinformation, climate disruption, and societal polarization now constitute interlocking threats to the very infrastructure of global governance and public trust in resilience and safety policies.

Yet if we are to truly “update” our mental models of risk, as the authors call for, we must extend our focus beyond institutional fragility and cognitive biases impacting optimal, collective, and long-term oriented decisionmaking. Their argument identifies a real epistemic problem, but the solution must also confront the deeper psychopolitical architecture shaping public responses to risk. It is not enough to acknowledge short-termism and policy inertia. We must interrogate, for example, how fear, identity, fairness, and group belonging interact with disinformation and moral narratives to shape (and often undermine) policy legitimacy.

From the standpoint of behavioral public policy and social, environmental, and political psychology, this signals a deeper paradigmatic shift: one that replaces isolated, technocratic interventions with frameworks that are socially, cognitively, and emotionally coherent. While Schoonover et al. rightly reference the “availability heuristic,” or the tendency of the public and policymakers to focus on the latest and most dramatic incidents, the literature has long highlighted a broader suite of psychological obstacles—confirmation bias, system justification, sunk-cost fallacies, affective heuristics, moral tribalism, social amplification of risks, and egocentric bias, to mention just a few—that distort public reasoning and dampen cooperative instincts in high-stakes contexts. These biases do not merely hinder judgment; they structure the meaning-making process around risk itself. Thus, the availability heuristic is only one of the numerous potential psychological barriers to consider when investigating decisionmaking in disaster risk management.

Along with that, I would argue that polarization and mistrust are not exogenous political conditions; rather, they are reinforced by psychological dynamics such as zero-sum thinking, group status threat, and epistemic closure. Without addressing these, any effort to improve institutional capacity or resilience will fall short of public uptake. As the authors suggest, risk is no longer an event—it is a condition, shaped as much by interpretation, perception, and identity as by data or planning.

In this light, I propose a complementary dialogue: one that maps, integrates, and amplifies interdisciplinary dialogues to achieve a more holistic comprehension of the psychosocial and institutional dynamics driving global risk by considering also academic discussions with behavioral economists along with social, environmental, and political psychologists.

Through such an integrative approach, we can substantially contribute to updating mental models of risk as suggested by the authors, with models that are not only technically sound but also socially and psychologically resonant with cutting-edge proposals for the new emerging world.

Lucas Heiki Matsunaga