Climate change adaptation has taken a central place on the agenda of financial stability and European prudential supervision. The EIOPA Chair recently stated that climate change is transforming some regions of Europe into a real challenge for insurance activity, in a development that has manifested itself through the integration of climate risks into the Solvency II regime, the development of climate stress tests and work on the protection gap of natural catastrophes. Also in Portugal, the release of the Report of the Independent Technical Commission on the 2025 fires, at the end of July, represents a structured institutional analysis exercise aimed at identifying vulnerabilities, evaluating public policies and formulating recommendations to strengthen national response capacity to extreme risks.
In 2025, 8,256 rural fires and 271,587 hectares of burned area were recorded, corresponding to the fourth largest burned area since official records began. The Piódão fire exceeded 65,000 hectares, constituting the largest fire recorded in Portugal. Although weather conditions contributed decisively to the severity of the season, the Commission concludes that these alone do not explain the extent of the burned area, identifying structural weaknesses in fuel management, land preparation, operational response and public policy implementation. The report presents 20 recommendations oriented toward strengthening prevention, the qualification and specialization of agents, operational coordination, emergency communication, monitoring and institutional capacity.
The recommendations presented by the Commission are based on principles that also cross European prudential supervision: prevention, preparation, qualification, coordination, monitoring, institutional capacity and continuous learning. The evolution of Solvency II, the climate stress tests promoted by EIOPA and international work on operational resilience point to the same conclusion: managing extreme risks requires an integrated, prospective approach based on the capacity of organizations to learn and adapt. The insurance sector thus plays a role that far exceeds the indemnification function, potentially contributing to greater articulation between prevention, adaptation and economic resilience.
The true test of resilience is assessed before the emergency, measured in the quality of governance and the capacity to anticipate scenarios. Just as financial supervision has evolved to prioritize prospective approaches based on scenarios, impact exercises and risk governance, climate risk management also requires institutions capable of articulating science, data, experience and expert judgment. The challenge does not consist exclusively of the capacity to respond to catastrophes, but in building organizations empowered to transform technical and behavioral knowledge into strategic decisions, strengthening climate resilience.
