Cascading Nature Risks: Applying the Rumsfeld Matrix to Case Studies on Pollinator Decline, an AMOC Collapse, and Zoonotic Pandemics

Research Objectives

The paper sets out to accomplish four objectives:

• Assessment of Climate Change Impacts: The study aims aim to assess extreme climate change’s impact on society, with the new concerns surrounding tipping points, with a emphasis on the predicted collapse of the AMOC mid-century.
• Sector Dependency Analysis: Another objective is to analyze how economic sectors depend on biodiversity and to assess the cascading impacts of pollinator loss on sectoral stability.
• Link between Biodiversity Loss and Zoonotic Diseases: The paper investigates the connection between biodiversity loss, climate change and the rise of zoonotic diseases. It explores insights from the recent pandemic to prevent future pandemics and associated costly cascading economic impacts.
• Technological Advancements: Finally, the study examines the role of technology in uncovering and understanding cascading nature risks. Research Questions:

• How do economic sectors with varying dependencies on biodiversity align with the different quadrants of the Rumsfeld Matrix, and what implications does sectoral dependency have for conservation strategies?

• How can a collapse of the AMOC be understood from a climate-biodiversity nexus vantage point, and which cascading risks can be identified to society?

• How does biodiversity loss and climate change influence the emergence of zoonotic diseases?

• In what ways can technological advancements illuminate the ’Unknown Knowns’ and ’Unknown Unknowns’ surrounding nature risks?

The Usefulness of the Rumsfeld Matrix for Understanding Risks

Explaining the Rumsfeld Matrix The Rumsfeld Matrix provides a nuanced framework for categorizing risks [3]. When applied to nature risks, it helps delineate the scope of the challenges, and the knowledge gaps that appear. However, it is important to explore the origins of the Rumsfeld Matrix to fully understand its application in this context. In fact, the Matrix’s origins can be traced back to a February 2002 press conference held by the U.S. Secretary of Defense, Donald Rumsfeld.

Here, Rumsfeld cautioned against the possible risks posed by the alleged, but yet undiscovered Weapons of Mass Destruction supposedly being developed by the Saddam Hussein regime. Defense Secretary Rumsfeld said: “There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we now know we donʼt know. But there are also unknown unknowns. These are things we do not know we donʼt know” [28].

Unknown security risks had materialized in major way the year before, on 9/11 2001. No one had imagined that terrorists could use airplanes as bombs, and take down the Twin Towers. The 9/11 Commission later labelled this inability “a failure of imagination” (9/11 Commission). In fact, a lack of imagination is central to keep in mind when attempting to spot most impactful unknown-unknown risks, the so-called Black Swans. For the CIA, the State Department, the FBI and the Department of Defense, another intelligence failure had to be prevented, and the Rumsfeld framework emerged from this tense intelligence situation.

With the unknown-unknowns, Rumsfeld famously addressed a question about what uncertainties could be tolerated, and what knowledge level would be needed before decisive action can be taken. This implied expanding the risk landscape to the unknown-unknowns. Hence, a precautionary approach was now adopted, leading to the notion of preemptive action, which was highly controversial; but for the Bush administration unknown high impact security risks had to be identified, assessed and effectively handled, even if it meant going to war.

This shift towards addressing uncertainties signaled a new era in risk management and decision-making strategy. From Rumsfeld’s statement, several academics went on to elaborate a risk framework, now known as the Rumsfeld Matrix [13, 14, 1, 3]. Rumsfeld’s framework, though intended for geopolitical analysis, offers insights for navigating the uncertainties surrounding nature risks, particular in the 21st century, where we find ourselves in a rapidly warming climate, due to higher greenhouse gas levels.

Similarly to the U.S. intelligence situation post-9/11, in an era of global warming and with the loss of biodiversity leading to species decline and ecosystems disruption, significant unknowns exist; waiting until all facts are gathered about the locations of certain endangered species may well put that particular species at risk, either due to a loss of an ecosystem or due to a changing climate [2].

Growing Awareness but Increased Action Needed on High-Impact Nature Risks

Rumsfeld was not the first to emphasize the things we cannot see or perceive. Also, earlier scientific work focused intensely on unknowns and uncertainty. In fact, Heisenberg’s Uncertainty Principle highlighted the impossibility of simultaneously knowing a particle’s exact position and its momentum. The uncertainty principle illustrated a fundamental limit of knowledge in quantum mechanics. The uncertainty principle reflects the inherent uncertainties in complex systems, where some variables remain unpredictably elusive, outside our analytical and methodological understanding, embodying the unknown aspects of a research situation [16].

Recognizing the Unexpected: High Impact–Low Probability Events Advances in climate science have rendered certain aspects of extreme events more predictable. Understanding the dynamics of high-impact natural risks, such as severe droughts is important, because of the increasing frequency of what were once considered rare, 500-year droughts. Prolonged drought events reduce water availability, triggering a cascade of socio-economic disruptions including crop failures, famine, escalating poverty, and forced migration.

Policy-makers are recognizing the importance of preparing for high-impact, low-probability events. Not least because the COVID-19 pandemic constituted a low-probability event but with far-reaching impacts to society. In the years following the COVID-19 pandemic, the European Commission has emphasizing the need for Member States to take prevention and preparedness measures. The EU’s preparedness includes better mapping of new and emerging risks, supporting risk assessors and decision-makers in conceptualizing high impact risks, and developing no-regret options for managing them. Enhancing preparedness requires an increased resilience of individuals and societies to unfamiliar risks, which also involves preparing citizens for such events [29].

Similarly, the Intergovernmental Panel on Climate Change’s AR6 report from 2021 stressed the potential occurrence of high impact/low-likelihood (HILL) climate events. The IPCC argued that “changes in several climatic impact-drivers would be more widespread at 2°C compared to 1.5°C global warming and even more widespread and/or pronounced for higher warming levels” [30]. This calls for an strengthened approach to risk assessments that factors in the probability of compounded risks from rising temperatures, and the extreme outcomes that may occur more often. One of IPCC members, professor Richard Betts, Head of Climate Impacts Research in the Met Office Hadley Centre and a Professor at the University of Exeter, recently argued: “With rising global temperatures, we are edging closer to the thresholds for more and more HILL events. Greater research into these events will help scientists advise policy makers on their thresholds and impacts”.

Defining Nature Risks The concept of nature risk covers the threats to businesses and societies from environmental degradation, including climate change and biodiversity loss. It refers to a range of environmental uncertainties that can impact economic and social systems through extreme weather such as typhoons or hurricanes, changes in rainfall, and disrupted supply chains due to crop failures or shortages.

Nature risks are worsened by factors such as climate change, land degradation, and biodiversity loss. These challenges demand integrated approaches in both corporate and governmental planning to mitigate potential disruptions. In terms of known-knowns, nature risk involves quantifiable data such as statistics on water scarcity, and the economic impacts of natural disasters.

These known parameters allow businesses and policymakers to plan and mitigate risks effectively. Effective management of nature risks, therefore, is crucial for the resilience and reliability of business and government operations. It requires that these risks be incorporated into broader business strategies for sustainable development, ensuring that organizations can adapt and function amid environmental changes [31].

However, nature risk also encompasses unknown- unknowns—unpredictable elements that cannot be foreseen or planned for, such as sudden ecological collapses or unprecedented natural disasters, which pose significant challenges to risk assessment models. With a comprehensive global inventory of climate impacts at our disposal, governments are better positioned to anticipate and respond to these worst-case scenarios, even those that are unprecedented or involve compounded effects.

However, the complexity of these challenges is compounded when multiple extreme events occur simultaneously. For instance, simultaneous occurrences of heatwaves, droughts, and wildfires can severely strain both natural and human systems. This convergence can overwhelm global emergency response capabilities and disrupt food supply chains, illustrating the feedback loops that worsen the initial impacts.

How can we truly prepare for the unknown? The distinction between knowns and unknowns in nature risk highlights the critical need for robust risk management strategies [32]​. The risks of entering into a 2-3°C world implies that climatic tipping points may start to move faster, which can make the climate system unstable, and tipping points may act as severe risk multipliers. Therefore, understanding high impact nature risks particularly associated with climate change becomes increasingly important for governments and for institutional investors with long time horizons.

Weitzman’s ‘Dismal Theorem’ Revisited: Could Extreme Climate Events Accelerate Biodiversity Loss?

The dismal theorem, as formulated by Martin Weitzman, highlights the limitations of traditional cost-benefit analysis when addressing the risks of extreme climate change. These risks, characterized by their low probability but potentially infinite costs, make standard cost-benefit models inadequate [33]. Weitzman’s work stresses the challenges of applying these models to global climate policy due to the unpredictable and severe outcomes of extreme climate events.

Weitzman’s paper critiques the inadequacy of existing economic frameworks to capture the complex, far-reaching, and difficult-to-reverse impacts of climate change. He emphasizes the need for new economic models that can accommodate the “unknown unknowns” of climate science, pointing to the fat-tailed risks and the uncertainty surrounding extreme climate scenarios [15]. This has paved the way for a research agenda focused on catastrophic climate change, with a growing number of researchers examining high-impact low-likelihood (HILL) events that emphasize the significant risks posed by a 2-3°C temperature increase above pre-industrial levels [11].

The dismal theorem underscores a critical insight: even low likelihood events can have a profound effect on the expected value of climate change impacts, challenging the utility of cost-benefit analysis in forming global climate policies. This calls for a reevaluation of conventional economic models and highlights the importance of developing methodologies that better account for the severe uncertainties and potential catastrophic outcomes of climate change.

Recent research on climate tipping points provides projections of a particular scenario that supports Weitzman’s dismal theorem. These studies suggest a cascading risk situation that may challenge conventional economic theories in severe climate conditions, extending beyond the theoretical speculation associated with the dismal theorem. To the AMOC collapse scenario the paper now turns.

Expected Impacts from Crossing a Tipping Point: The Risks of a Mid-Century AMOC Collapse

Tipping points are key components within the Earth’s climate system vulnerable to rising temperatures. A recent and insightful OECD report identified some 11 major climate tipping points such as the disintegration of the West Antarctic and Greenland Ice Sheets, the thawing of Arctic Permafrost, the breakdown of the Atlantic Meridional Overturning Circulation (AMOC), and the extensive withering of the Amazon Forests. But with the AMOC interacting with several of the other elements as is see on (Figure 2), [7].

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Occasionally, unexpected events, known as ‘tail events’, occur far outside normal expectations [34]. An AMOC collapse is one of Nordhaus’ tail events; severe, impactful and cannot and should not be underestimated in terms of physical climate risk. Caution and attention is warranted [35].

The Rumsfeld Matrix clarifies that we uncover and understand the ‘unknown unknowns’ of an AMOC collapse, underscoring the necessity for a structured approach to anticipate these large unforeseen nature risks [3].

What Recent Science has Revealed about the AMOC's Stability What unforeseen disruptions and risks might arise if the AMOC collapses mid-century? To answer that, let us first start with the basics of the AMOC system: The Atlantic Meridional Overturning Circulation (AMOC) circulates warm and cold water throughout the Atlantic Ocean as part of a larger global conveyor belt. This system begins with warm surface water traveling towards the poles, where it cools, densifies and sinks, flowing southward. In about 1,000 years, it cycles back via upwelling, completing its journey.

Previous assessment reports by the IPCC have underscored an AMOC collapse’s impacts on weather systems and regional rainfall patterns, but been cautious, when it comes to predicting the exact timing of a collapse of the AMOC. In fact, the IPCC assessed that “The Atlantic Meridional Overturning Circulation is very likely to weaken over the 21st century for all emissions scenarios. While there is high confidence in the 21st century decline, there is only low confidence in the magnitude of the trend. There is medium confidence that there will not be an abrupt collapse before 2100. If such a collapse were to occur, it would very likely cause abrupt shifts in regional weather patterns and water cycle, such as a southward shift in the tropical rain belt, weakening of the African and Asian monsoons and strengthening of Southern Hemisphere monsoons, and drying in Europe” [30].

Indeed, a key uncertainty underpinning AMOC research is that it is difficult to identify long-term changes in the AMOC, as it has only been monitored directly since 2004. Recent research uncovered that the AMOC was weaker during the past 150 years than at any other time during the past 1,600 years [36]. Other researchers have found the AMOC has weakened by 15% since 1950 [37].

A critical slowdown in the North Atlantic current was projected by a Danish research team in 2023 [9]. The Ditlevsens used real AMOC data to project that the Atlantic Ocean’s circulation may shut down by 2057 because of an ongoing influx of fresh water from the Greenland melt-off into the North Atlantic under a high emissions scenario.

From a mathematical point of view they also highlight that the AMOC historically has shifted from an ‘on’ state to an ‘off’ state, but exactly when such a phase shift occurs again is yet unknown.

The Utrecht Research Group Found a Physical Tipping Point in the AMOC A physical tipping point in the AMOC has been proven for the first time in a large scale climate model. Until now, only computer models have pointed to a collapse, but recent studies offer new evidence. Van Westen et al., 2024 have identified a warning sign: a change in how much fresh water the ocean current moves at the Atlantic’s southern edge. This new warning method is better than previous research, but still significant research and data collection is needed as the tipping point may get closer mid-century [10].

In their simulation, a regional climate shift occurs in the model ran by a University of Utrecht research team [10]. The Van Westen et al. study points to a significant cooling of Northern Europe with notably longer and colder winters, but also large-scale European drought with implications for water dependent sectors.

Both summer and winter temperatures in Europe will decline, and regional rainfall patterns across Europe will change; Europe is expected to become significantly drier, which may put significant pressure on freshwater ecosystems [10]. Major climate changes and changes to the water cycle represent a critical risk for not just ecosystems but also non- migratory species adapted to specific temperature conditions and a specific water availability.

These projections underscore the ongoing relevance of Weitzman’s early work on cost estimating catastrophic climate change. There is a critical and urgent need for more work to understand tipping points, and mitigate extreme climate change risks. Not just a theoretical risk, the AMOC collapse could be a planetary event [35]. It may amplify physical climate risk requiring immediate policy attention, and rigorous scientific investigation to mitigate its potentially costly impacts to society.

Predicted Impacts of an AMOC Collapse on Rainfall in the UK The consequences expected and modelled by Westen V, et al. [10] point to large-scale abrupt changes on a regional or even planetary scale. A key cascading impact may be on food security which may be influenced by large-scale droughts in the years following an AMOC collapse.

In fact, British researchers have modelled the physical impacts of an AMOC collapse to the United Kingdom [37]. They predict a 30-40% decrease in rainfall and significant reduction in arable land across the UK, as is seen in (Figure 3). The researchers also point to large-scale changes in rainfall patterns, shorter summer growth seasons and longer and more severe winters, in line with the Utrecht study.

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In other words, an AMOC collapse may be very severe on a key sector underpinning societal stability, and it might drastically alter agricultural practices and the health of ecosystems reliant on summer rains in the UK. Such conditions may also impact biodiversity and forests in the UK.

The British study is important; but additional studies on rainfall and temperatures in North America and Europe in an AMOC collapse scenario is needed, also from a ‘biodiversity- climate nexus’ approach; a 40% drop in summer rainfall would imply habitat changes for many species and may have cascading impacts on biodiversity-dependent sectors such as agriculture and forestry adapted to a different and warmer regional climate. It is advised that similar scenarios are developed for other parts of Europe, and not just in an AMOC collapse scenario, but in a 50% weakening scenario as well. There may be profound spill-over effects between the natural systems we rely on, and human support systems such as agriculture, drinking water supply, etc [37]. The British study and Westen V, et al. [10] studies also point to risks to our food security from an AMOC collapse. Mitigating the effects of the expected drop in precipitation in the UK, such as through widespread irrigation, is assessed as economically prohibitive [37].

The literature review has been unable to find cost estimation on the AMOC collapse to a regional economy such as the EU-27. In fact, when scenarios include extreme climate change and their tail risks, few studies exist that assess the differences in damage costs of known impacts compared to damage costs. But one study saw a 10 factor rise in damages when extreme events are factored in [38].

While the likelihood of a tail event such as the AMOC collapse remains uncertain, their potential risks to society are profound and warrant further research because the sting of extreme climate change is simply greater in the tail, as it is not just a ‘Black Swan’ event within climate change scenarios, but short-term with long-lasting changes to the climate in the Northern hemisphere. The exact cascading economic and ecological consequences of an AMOC collapse may dwarf those anticipated from gradual climate change. The unpredictability of such a non-linear event places the AMOC collapse at the heart of the new research field of catastrophic climate change [11].

Predicting the Unpredictable Cascading Impacts For biodiversity, the modeled impacts on the UK imply changes to its freshwater ecosystems, including forests, rivers and lakes, due to reduced water availability. This reduction threatens vital ecosystem services, such as water filtration, carbon storage, and wildlife habitats, demonstrating the critical interconnectedness of climate, water availability, and land use. It could trigger shifts in species distributions, habitat loss, and disruptions in migratory patterns.

The event underscores the necessity for adaptive conservation strategies that consider extreme climate change scenarios, thereby enhancing ecosystem resilience against unpredictable risks.

A high impact nature risk such as the AMOC collapse illustrates the complex interaction of ecological, agricultural, and hydrological systems at risk. This convoluted risk underscores the urgency for robust, integrated approaches to sectoral risk management that account for the intricate dependencies between human and natural systems, especially when we see major changes in the water cycle, which is expected.

Foresight, scenario development, interdisciplinary research, and policy action are necessary to mitigate potential disruptions to food security, water availability, and biodiversity across the affected societies, based on the impacts described by Ritchie H, et al. [39] and Westen V, et al. [10]. The domino or ripple effects across impacted sectors can be illustrated using a cascading impacts diagram, as shown in (Figure 4).

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The figure is a modified and expanded version made by the author, inspired by the ‘Verisk Maplecroft Cascading Risks Model’, and based on research from Westen V, et al. [10]; Ditlevsen P, et al. [9]; Yin J, et al. [40]; Velasco JA, et al. [41]; Wang H, et al. [42]; Møller NF, et al. [43]; Ceola S, et al. [44]; Peings Y, et al. [45]; Virna ML, et al. [46]; Ureta C, et al. [47]; Mohammadi Y, et al. [48]; Ionita M, et al. [49], and recent extreme weather examples that illustrate cascading impacts.

From (Figure 4), it is shown that the collapse of the AMOC acts as a significant risk multiplier. It may become a catalyst for a complex web of primary and secondary impacts that resonate throughout social, economic, and environmental systems. An AMOC collapse could lead to severely colder winters [10]. Primary impacts from regional cooling, like the increase in energy demand due to extreme winter conditions could also lead to a rise in energy prices and decreasing energy availability, which could strain industries and increase credit risks as businesses in energy-dependent sectors struggle to adapt to the new economic reality.

Simultaneously, an AMOC collapse leads to longer and more devastating droughts which aggravates the destruction of natural capital [49]. As ecosystems falter, economic effects may worsen. Also economic downturns that are likely to occur due to a reduction in the services these ecosystems provide such as water purification, agriculture support systems, etc. Competition over increasingly scarce natural resources such as freshwater but also biomass and food may intensify, exacerbating political unrest and potential conflicts. More extreme weather may lead to higher food inflation due to droughts and more crop failures [50].

Moreover, reduced rainfall and higher temperatures can lead to water shortages, potential declining crop yields or crop failures, and volatile food prices [37]. These agricultural challenges will have worst consequences for rural areas and contribute to overcrowding in cities as people may of an AMOC collapse migrate in search of better living conditions and employment, placing additional pressure on urban infrastructure.

From here, the expected impacts across societies become uncertain and belong in the ‘unknown-unknown’ category. Expected droughts may be so severe that they resemble the Great American Dust Bowl. From the Dust Bowl, economists have assessed that the U.S. states hit the hardest saw increased migration and lower productivity and investments [51]. But even the worst ecological disaster in U.S. history may fall short in providing a reference that fits the scope and impact of an AMOC collapse.

All in all, the collapse of the AMOC contains several unknown-unknowns; the unpredictability and timing of the tipping point and the associated risks, in particular the impact on water supply, ecosystems, forestry, agriculture but also cascading implications on food prices, ecosystem stability, habitat distribution, impairment of carbon sequestration capabilities in existing wetlands and forests, and ultimately food security and social stability [3].

Additional cascading impacts may be populism and anti-immigrant rhetoric, as locals may perceive newcomers as threats to job security and cultural identity. Such societal shifts may undermine political stability and social cohesion, and could potentially disrupt the fabric of communities, magnifying the geopolitical risks of protectionism and trade wars that can have far-reaching consequences on a global scale. But these second-order impacts are difficult to predict.

Climate Adaptation and Policy Needs: Awareness is low at the moment of such a scenario in the policy community. More modeling is needed, as preparing for such profound impacts not only requires an understanding of the tipping point’s national impacts in Europe, but also further analysis of such a scenario’s impact on the agriculture sector’s vulnerabilities and capacities to adapt to a potentially dryer and colder growth season.

These risks underscore the urgent need for policymakers to enhance their understanding of how changes driven by the Atlantic Meridional Overturning Circulation (AMOC) affect the water cycle. It is crucial to start preserving diverse habitats and to increase investment in research on climate- resilient agriculture as strategic defenses against climate- induced extremes. Furthermore, a deeper comprehension of the interconnections between biodiversity and food production in extreme climate scenarios is essential. Such understanding is vital to address the threats to food security, public health, and freshwater access, which jeopardize local economies and the stability of companies dependent on food systems.

Societal and Environmental Impacts of AMOC Collapse: The potential collapse of the AMOC poses a significant and high-impact risk with potentially permanent and widespread consequences for climate systems, food security, and ecosystems. Direct effects could include altered weather patterns and temperature distributions, not least affecting North America and Europe. Indirectly, it poses threats to water security, agricultural productivity, and biodiversity. These conditions highlight the critical need for scenario- based planning and the development of robust global climate resilience policies.

Underestimation and Impact of Nature-Related Risks: As highlighted earlier, the risks associated with natural systems are often not fully appreciated or understood. A systematic approach to mapping and analyzing the causal chains that trigger widespread, cascading risks can enhance our understanding of why these threats are frequently ignored. The potential collapse of the AMOC, as illustrated in (Figure 4), exemplifies how such an event can have complex and multiplied effects across critical sectors including energy, food, and housing. This complexity underscores the urgent need for research to accurately assess the cost implications of these impacts, when possible.

Policy and Sectoral Strategies May be Needed for Enhanced Preparedness: A key question is how to respond to recent research, given the time horizon mid-century? It seems as prudent advice that government policies and programs are updated and informed by the latest research on an AMOC collapse. Especially given the evidence suggesting we are nearing a tipping point.

The cascading risks uncovered in (Figure 4) underscore the need for further risk mapping and assessment. Government policies that are not only reactive to immediate climate impacts but also proactive in their anticipation of indirect and potentially more destructive secondary effects. The EU Commission’s communication on high impact-low probability events are a good starting point [29]. As these cascading impacts unfold, they create a reinforcing feedback loop that intensifies the primary consequences of an AMOC collapse. And it is perhaps the breadth of impacts and their severity as well as the speed at which they could arrive, which are worrisome. This demands an integrated and robust approach to risk management and mitigation.

From a precautionary standpoint, it is sensible advice that key stakeholders, industry groups and trade associations in high-risk sectors, such as the water supply sector, agriculture, housing and energy, proactively include an AMOC collapse scenario in their strategic planning at this stage. This forward-thinking approach will ensure that these sectors can adapt better to potential large-scale climatic changes mid-century.

What We Know: Sectoral Biodiversity Dependencies

The World Economic Forum (WEF) has tremendous agenda-setting power [54]. Increasingly, biodiversity loss has climbed the ladder of the Global Risks reports. Consequently, businesses that have negatively impacted biodiversity are becoming more conscious about mitigating their impacts. But, integrating biodiversity-conscious decisions into business strategies is vital, especially for sectors heavily reliant on natural resources.

Businesses significantly influence biodiversity loss, playing a key role in ecosystem preservation. Torelli R, et al. [55] highlights this, focusing on the approaches of small businesses. Innovation in business can aid biodiversity; businesses can factor in ecosystem impacts in investment decisions, reflecting a growing trend towards incorporating biodiversity in corporate strategies. The ESG movement is evolving, and the adoption of biodiversity risks is a new theme in corporate responsibility reporting. It marks a significant move towards more expansive responsible business practices.

The 2024 Global Risks Report highlights the interdependence between economies and nature’s capital [4]. Economic stability depends on biodiversity - the loss of biological diversity poses risks for businesses, investors, financial systems, and economies. Reliance on natural capital implies inherent vulnerabilities, especially in developing countries. The Global Risks Report brings this to the forefront by ranking biological diversity loss among the top 3 risks to the world towards 2030, in both likelihood and impact.

The WEF’s 2023 Global Risks Report anticipates “Biodiversity loss and ecosystem collapse” as not only a threat of abrupt decline this decade but also an intensifying issue. This outlook is supported by the placement of all six environmental hazards, as illustrated in (Figure 5).

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The potential cascading economic ramifications are vast due to the entrenchment of biodiversity in certain economic sectors. Sectors including Agriculture, Fishery and Aquaculture, Forestry, and Food, Beverages & Tobacco, which derive over 90% of their value from natural capital, are vulnerable, and the economic impacts from biodiversity loss is detailed in (Figure 5), showing MSCI’s assessment of these dependencies [5]: The Agriculture sector heavily relies on the ecosystem services pollination, soil fertility, and water cycling, making it susceptible to biodiversity loss which can lead to reduced crop yields and increased vulnerability to pests and diseases.

Fishery and Aquaculture are directly dependent on the health of aquatic ecosystems; changes in water temperature, acidity, and habitat destruction can drastically affect fish stocks and the sustainability of these industries. Forestry’s dependence on stable ecosystems ensures the provision of wood and non-wood forest products, while also being crucial for carbon sequestration and water regulation.

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Integrating biodiversity into risk management is necessary for sectors reliant on natural capital. Agriculture benefits from ecosystem services like pollination. Studies show plant and soil biodiversity positively impact agricultural multifunctionality, enhancing pest control and nutrient cycling, supporting sustainable practices. Transitioning from diverse ecosystems to monocultures, like oil palm plantations, drastically reduces species diversity, leading to food web collapse [56].

Climate change can cause ecological shifts and pollinator loss [57]. Understanding links between climate extremes, agricultural productivity, and food security is essential; climate impacts alter conditions, affecting yields. Extreme weather notably reduces global cereal production, with drought and excessive rainfall primarily impacting U.S. maize.

Recent studies advocate integrating climate and biodiversity risks into environmental-financial risk frameworks. Kedward K, et al. [58] call for transparent disclosure and adjusted financial regulations to mitigate ecological harm. Imposing stricter capital requirements on harmful activities prevents crossing ecological thresholds, necessitating sector-wide coordination. Research linking biodiversity loss with financial instability, like the study on biodiversity-related financial risks (BRFR) in France [59], shows securities issued by entities dependent on ecosystem services, highlighting the terrestrial biodiversity footprint and urging risk assessment reevaluation to include physical and transitional risks.

It is likely that we underestimate the need for resilience of the ecosystems that underpin global food systems, public health, and overall economic well-being. Acknowledging such “missing risks” mark a critical step towards sustainable development and ecological preservation [60].

An Known Unknown: The Cascading Risks to Society of Insufficient Pollinators

How reliant are global food systems on the often- overlooked role of pollinator insects, and what are the potential consequences of their decline? Declining bee and insect populations signify a pressing environmental issue [27]. Pollinators, especially bees, are vital for most crops and wild plants, essential for agricultural productivity and biodiversity [61].

In the ‘known unknowns’ quadrant, we recognize the importance of pollinators but lack comprehensive data on their decline and ecological impacts. The ‘unknown unknowns’ include unexplored effects within ecosystems. Research is necessary to understand the interactions between pollinators, the environment, and dependent sectors [5]. Pollinator loss could decrease plant diversity, affecting food webs and ecosystem services like carbon sequestration and soil fertility.

Inadequate Pollination Implies Cascading Risks to Biodiversity and to Human Health

The decline in pollinator populations triggers effects across ecosystems and societies, reducing agricultural productivity and biodiversity [62]. For example, in Sumatra’s rainforests, oil palm conversions reduce biodiversity, impacting the entire food chain [63].

Cascading impacts include diminished food security, economic stability, and disrupted ecological balances. These decrease plant diversity, impairing food webs and ecosystem services, and emphasize pollinators’ crucial role. This decline in pollination efficacy can escalate market prices of commodities, threatening the global food supply chain, as shown in (Figure 7) [64].

Climate change-induced droughts, pesticides, and habitat loss - these factors stress pollinator populations. Introducing honeybees alone disrupts native bee populations and networks, leading to cascading extinctions [61]. Consequently, Reilly JR, et al. [65] demonstrate a substantial pollination deficit in the U.S., where wild pollinators economically value over $1.5 billion annually.

Smith MR, et al. [66] explore the effects of inadequate pollination on global health by affecting diet-related diseases, emphasizing the vital role of animal pollinators in producing essential foods. Their analysis shows a 3%-5% global reduction in key crop production, with severe economic and health impacts, not least in lower-income regions [66]. Economic losses in Honduras, Nepal, and Nigeria highlight the need for pollinator-friendly practices to protect health and sustainability [66].

The nature risk of pollinator decline affects agriculture, ecosystem biodiversity, and global food security. Loss of pollinators could diminish plant diversity, disrupting food webs and undermining ecosystem services such as carbon sequestration and soil fertility. The direct impacts are seen in decreased crop yields, while indirect effects exacerbate food scarcity and economic instability in agriculture-dependent communities. This necessitates the development of robust conservation strategies.

Given the effects on agriculture, human health, and economic stability, the decline in pollinators is a high- impact risk, underscoring the need for proactive strategies to mitigate biodiversity-related financial risks and ensure stability. Efforts should focus on safeguarding habitats and adopting less harmful farming practices, [67]. Consensus

exist that addressing the primary drivers of biodiversity loss—habitat destruction, pollution, climate change, overexploitation of resources, and the spread of invasive species—is crucial [68, 69].

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Future investments should aim to bolster pollinator populations and assess their resilience during extreme climate events [70], addressing a critical lever for maintaining global food security, economic stability, and public health. Further research is needed to map and assess the complex interactions between pollinators, the environment, and the biodiversity dependent sectors [5].

The Interconnection between Ecosystem Disruption and Zoonotic Diseases

Part IV explores the connection between ecosystem disruptions and the emergence of zoonotic diseases like COVID-19 and avian flu from 2020 to the present. It illustrates how changes in climate and ecosystems contribute to new ‘unknown-unknowns’ and introduce cascading risks, manifesting as unpredictable pandemic threats.

The relationship between habitat degradation and zoonotic diseases is evident from the COVID-19 pandemic [71]. Land use changes like deforestation, intensive agriculture, and the unregulated wildlife trade have impacted biodiversity and ecosystems, increasing pathogen transfer risks to humans.

This disruption leads to wildlife habitat loss and facilitates pathogen transfer to humans. The COVID-19 virus was a complex known unknown in public health; we recognize the existence of animal-borne pathogens and their nature risks but cannot predict their impacts or transfer points. The unpredictability of these events underscores the challenge in predicting and preventing outbreaks despite awareness of biodiversity loss risks.

Over 10,000 virus species, mainly in wild mammals, can infect humans but remain largely unnoticed. Climate change and land use changes may break geographical barriers between species, leading to new interactions and zoonotic spillovers. Researchers use phylogeographical models to identify potential hotspots for novel viral transmissions, particularly in biodiversity-rich but vulnerable regions [72].

Bats, with unique dispersal abilities, are likely major facilitators of new viral transmissions affecting humans. This shift, intensified by climate change, emphasizes the need for coordinated viral surveillance and biodiversity monitoring in the warming tropics to manage emerging zoonotic threats effectively.

The Biodiversity-Climate Nexus: Amplification of Disease Spread by Climate Change

Climate change and habitat destruction accelerate the spread of zoonotic diseases, adding complexity to ecosystem health management. These factors create layers of uncertainty that unpredictably exacerbate conditions conducive to disease proliferation and interspecies transmission.

Climate change influenced the emergence of SARS- CoV-2. Researchers suggest that over the last century, global warming made southern China’s Yunnan Province a favorable habitat for bats, introducing new coronavirus types to the region. They used historical climate data and vegetation maps to track changes in bat species diversity globally [73]. The study highlights the need for addressing climate change to prevent future health crises.

It is essential that our environmental management strategies address the risks posed by environmental degradation, climate change, and emerging infectious diseases comprehensively, combining conservation, surveillance, and public health efforts [74].

Cascading Economic and Societal Impacts of Pandemics

The unfolding of the COVID-19 pandemic has vividly demonstrated the vulnerability of global economic and societal structures to zoonotic diseases. The swift and unprecedented shutdowns in critical sectors such as aviation, hospitality, and entertainment sectors had deep and lasting impacts, showcasing the unpredictable and extensive reach of pandemic-induced disruptions, which in effect were a Black Swan that could be understood and predicted only in hindsight.

These events have served as real-world examples of both known and unknown unknowns, revealing profound weaknesses in our global interconnectivity and underscoring the imperative for more resilient preparedness and recovery frameworks [18].

Strategies for Mitigating Pandemic Risks

The One Health approach integrates human, animal, and environmental health, crucial for addressing zoonotic disease challenges. It promotes a comprehensive strategy that enhances preparedness for disease emergence. Emphasizing global surveillance and cross-sectoral cooperation, the One Health framework strengthens our capacity to handle zoonotic pathogens and pandemic potential [75]. The COVID-19 pandemic reiterated the crucial role of natural ecosystems in maintaining health security and economic stability [76]. Recognizing the risks from ecosystem degradation and biodiversity loss is vital for societal resilience against future pandemics.

Impact and Spread Among Humans and Cattle

The transmission of H5N1 to humans typically occurs through direct contact with infected birds or their environments, underscoring the importance of containment strategies to prevent public health crises.

The 2023-2024 U.S. avian flu outbreak affected 60 million birds, surpassing the 2015 outbreak’s impact. Notably, the outbreak at egg facilities in Texas and Michigan impacted 6 million hens, with national egg supply recovery lagging, leading to increased egg prices.

H5N1 has also caused outbreaks among U.S. dairy farm cows across four states, with a farm worker in Texas contracting the virus, developing conjunctivitis, a symptom in humans exposed to avian flu. The USDA confirms that initial tests show low transmissibility to humans, but the presence of H5N1 in mammals has raised concerns about its potential evolution [77, 78].

Economic and Ecological Consequences: Cascading Risks

The current outbreak necessitates vigilant monitoring of H5N1’s mutation and the development of adaptive response strategies to mitigate potential public health crises. The ability of avian flu to jump species not only poses risks in agricultural settings but also raises significant biodiversity risks with broad economic implications. The outbreak threatens to disrupt agriculture and food sectors, potentially leading to extensive livestock losses, increased food prices, and costly containment measures.

Monitoring cascading risks to the food supply chain is crucial, as seen during the COVID-19 pandemic. Nature risks can influence value chains and impact societal pillars like food security, requiring robust preparedness to manage far-reaching impacts and ensure ecosystem and agricultural stability [79].

The unpredictable nature of H5N1 as it adapts across species emphasizes the need for strategic responses to manage livestock health and stabilize ecosystems integral to agriculture and food production. These scenarios highlight the emergent disease risks requiring substantial resources to address potential outbreaks.

Part IV has explored emergent and existing natural risks, focusing on the uncertainties of zoonotic pandemics and their unpredictable global impacts. It underscores the necessity for reassessing our interactions with nature and promoting sustainable practices to mitigate these risks [74, 18].

Enhancing Climate and Biodiversity Insights Through AI and Supercomputing

Supercomputers and AI represent transformative tools in environmental science, not least in enhancing our understanding of the known unknowns within the climate system, and the intricate nexus between climate change and biodiversity loss. By leveraging the immense computational power of supercomputers, scientists can perform detailed simulations and scenario-based modeling that incorporate an extensive array of variables, from atmospheric conditions to ecological responses. This capability allows for the exploration of complex, cascading impacts that high-impact nature risks pose to societies.

These technologies enable researchers to simulate various future scenarios such as an AMOC collapse scenario in great detail, predicting how changes in one tipping point element of the climate system can lead to significant shifts across entire regions. For instance, by modeling the long- term effects of ice melt on salinity levels and ocean currents, scientists can forecast changes in biodiversity, weather patterns, and even socio-economic conditions.

Ultimately, the integration of AI and supercomputing into environmental research not only deepens our comprehension of ecological and climatic dynamics but also improves our capacity to anticipate and prepare for the cascading effects of environmental disruptions. Better models and scenario building may translate known unknowns into insights on how to manage high impact nature risks.

A New Rumsfeld Matrix Applied to Nature Risks Derived from the Literature Review

The Advanced Rumsfeld Matrix below (Table 9)

condenses the critical insights on nature risks. It aligns known challenges with unpredictable threats.

The following lessons are derived from the literature review

Deepening the Climate Change-Biodiversity Nexus Agenda: The fourth quadrant contains the unpredictable “Black Swans”. Radical ecosystem interactions could be worsened by human impact and climate change such as the AMOC collapse, impacting regional biodiversity. Future efforts must develop adaptive, proactive strategies addressing unexpected biodiversity challenges, integrating biodiversity into economic models for sustainable development, and enhancing predictive ecological impact modeling under extreme climate scenarios [83].

COVID-19 and the Avian Flu has illuminated the links between biodiversity loss and zoonotic diseases. The pandemic stresses the importance of adopting a One Health approach that recognizes the interconnectedness of climate change, humans, animals, and habitats in addressing nature risks. Future research must focus on this nexus to prevent pandemics [84].

Integration of Technological Advancements: Image recognition technology is crucial for species identification and monitoring. Supercomputing, AI and ML enhance our ability to analyze big data, enabling rapid biodiversity assessments and accurate wildlife inventories, predicting ecological trends and uncovering patterns that might be missed by human analysis [85]. There may be a growing promise in how new nature risks can be uncovered, understood and mitigated.

Strengthening the Research Agenda on High Impact Nature Risks: The synthesis of insights from the Atlantic Meridional Overturning Circulation (AMOC) collapse scenario and the role of pollinators in ensuring food security highlights the necessity of an integrated and robust research agenda that addresses high impact nature risks, employing the precautionary principle in policy-making to navigate the uncertainties inherent in the climate-biodiversity nexus [34, 86, 87].

Scenario Modeling and Technological Advancements in Addressing Cascading Nature Risks: Investments in DNA sequencing reveal unknown species’ genetic blueprints, while image recognition and supercomputing, enhanced by AI and ML, enable better big data analysis. This capability allows for rapid biodiversity assessments, wildlife inventories, and the prediction of ecological trends, uncovering patterns often missed by humans [85].

Scenario modeling and the use of supercomputing simulates interactions between complex systems—climate, ecosystems, human societies—to assess the impacts of extreme events. To better understand cascading risks, we have to account for feedback loops between ecological degradation, social systems and economic systems, showing how a climatic tipping point can have impacts on water, food and natural resources, thereby creating social vulnerabilities, leading to governance challenges and societal instability [88, 89].

Interdisciplinary Collaboration on Nature Risks: Addressing biodiversity loss demands collaboration across disciplines, integrating climate science, artificial intelligence, big data, and statistics to develop strategies. This approach leverages diverse expertise to create better strategies to handle nature risks [90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 105, 106, 107, 108, 109, 110, 111, 112, 113, 114, 115, 116, 117, 118, 119, 120, 121, 122, 123, 124, 125, 126, 127, 128, 129, 130, 131, 132, 133, 134, 135, 136, 137, 138, 139, 140, 141, 142].