Actuarial modeling refers to a set of techniques, commonly used in fields like insurance and finance, to represent the functioning of industries and calculate the probability of future events. While standardized models are used in everyday actuarial practice, modeling also offers a unique opportunity to take a proactive approach to sustainability. A prime example of this is the triple bottom line accounting framework, which incorporates social, environmental, and financial factors into decision-making.

In recent years, research has explored how actuaries can further develop this framework into a dynamic model capable of measuring long-term impacts—extending beyond a single reporting period. As Actuarial Review notes, “the rigor and data orientation of the actuary [is] essential to seeing through often emotional and politically driven public narratives” surrounding complex issues such as climate change.

A recent article from the Society of Actuaries’ April 2025 Incorporating Climate Change into Actuarial Practice series emphasizes that traditional reliance on historical experience is no longer sufficient. Instead, actuaries must integrate climate scenarios, disaster projections, and environmental forecasts to accurately assess emerging risks and support more forward-looking, sustainable planning

Mitigation

Mitigation is a central theme in sustainability conversations, especially when addressing risks. There is frequent discussion about the need to mitigate the impacts of climate change and other environmental challenges. For actuaries, professionals trained to analyze and manage risk, mitigation is a core responsibility.

Actuaries primarily work in the insurance industry, which is uniquely positioned to lead on climate risk mitigation. Insurers have access to extensive risk data and the ability to influence behaviors and investments across sectors. Internally, insurers can adopt sustainable practices such as:

• Implementing sustainable investment strategies

• Measuring and reducing internal emissions, including those of suppliers

• Complying with regulations and publishing transparent sustainability reports

Externally, insurers can encourage more sustainable behavior by incorporating climate-conscious incentives into their products, including:

• Pay-as-you-drive auto insurance programs

• Premium discounts for hybrid or electric vehicles

• Incentives for LEED-certified buildings or energy-efficient homes

• Eco-friendly rebuilding policies that promote sustainable materials

• Green commercial property insurance policies and endorsements

Through both internal operations and customer-facing innovations, actuaries and insurers play a critical role in building a more resilient and sustainable future.

Learn about more sustainability concepts within this major.