This paper analyzes the medium to long-term implications of global warming for the evolution of global financial structures. Stern (2007) and other related scientific literature reports that greenhouse gas emissions generated by human activities will very possibly lead to global temperature increase of 1-5 degrees C by 2050. This will cause a dramatic increase in global risks to human life. The response to this will be the seeking-out of financial innovation by major forms, primarily in the area of insurance, but also in the diversification of asset holdings. We suggest in this paper that, with modest climate changes of 1-2 degrees C, the global insurance market will expand dramatically. However, under more extreme climate change scenarios, the entire global financial structure will undergo major changes, with a re-focusing of major financial activity away from intermediation between borrowers and lenders and the facilitation of the accumulation of assets, and towards a focus on insurance arrangements and the diversification of risks associated with climate change.
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