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Abstract
Hindsight tells us that COVID-19, thought by former President Trump andothers to have come out of nowhere, is more aptly labelled a “gray rhino” event,one that was highly probable and preventable. Indeed, despite considerableevidence of the impending threats of pandemics, for the most part, governmentsfailed to prepare for the pandemic, resulting in wide-scale social and economiclosses.
The lessons from COVID-19, however, should remind us of the perils ofignoring gray rhino risks. Nowhere is this more apparent than with climatechange, a highly probable, high impact threat that has largely been ignored todate. Despite those who deny climate change, there remains ample evidence ofthe increasing temperature of the earth. Moreover, like COVID-19, climatechange has the potential not only to create public health emergencies, but also tocreate wide-scale, enormous adverse impacts on the economy.
Indeed, the risks posed by climate change to the economy have the potentialto be so far-reaching that climate change should–as this article argues–be termeda systemic risk. As such, the economic implications of climate change need to bemitigated in order to preserve economic stability. This is not only necessary forprudential and economic reasons, but also to protect citizens’ health and safety,and to ensure that business does not exceed the limits of the planet.
While there has been some attention to addressing the economic implicationsof climate change at the global level, progress in the U.S. has been minimal. Thisis surprising for two reasons. First, because climate change has already causedunprecedented damage in certain parts of the country. Second, because to someextent, existing legislation and models may offer the tools to address the systemicrisks of climate change. Drawing inspiration from the Dodd-Frank Act, SECrules, and the FDIC model, among others, this article proposes regulatoryapproaches for mitigating the systemic risks of climate change in hopes thatCOVID-19 does not foreshadow our fate for climate change.