The World Meteorological Organization (WMO) just issued a five-year climate forecast that should grab every investor’s attention when it comes to managing risk. Temperatures are expected to stay at or near record highs, with an 86% chance that at least one year will exceed the 1.5°C global average threshold. That’s the threshold where extreme heat, storms, and droughts become more intense, more frequent, and more challenging to anticipate using outdated models built on decades of relatively stable climate risk trends.

The 2025 WMO climate forecast arguably marks a tipping point for how climate-adjusted investment models will need to evolve. A record fire season here. A failed harvest there. A flooded factory or a disrupted port. These are no longer anomalies. Investors should expect one or more of these events in any given year and adjust capital allocation strategies accordingly.

To be clear, the WMO’s findings confirm what many investors have already been witnessing, including in the U.S. Specifically, a steady drumbeat of extreme, often unpredictable events that are growing in severity and frequency. According to the WMO, 2024 was the hottest year ever recorded, with over 150 extreme weather events logged globally. According to Earth.org, the ten costliest disasters alone caused more than $229 billion in damages, roughly equivalent to the GDP of the state of Connecticut or the entire country of Portugal. Given this, it was little surprise when earlier this year the annual Global Risks Report from the World Economic Forum ranked extreme weather as the second-highest short-term risk, and the top long-term threat.