Global economic losses from disasters have surpassed $200 billion every year since 2016, according to a new report from the Milken Institute examining resilient community financing. The report, which draws from 75 stakeholder interviews and working group discussions following the 2025 Los Angeles fires, argues that communities face mounting climate risks without adequate tools to fund protection against extreme weather events that are intensifying in both frequency and severity.
The 2025 LA wildfires alone generated more than $130 billion in extreme weather losses, making it the costliest wildfire event in global history. The report notes that thunderstorms, hurricanes, and fires now intensify within hours, while extreme heat domes persist for weeks. These rapid-onset disasters leave neighborhoods unprepared and result in operational disruption, budget shortfalls, and a retreat by insurers and investors from high-risk areas. The economic and social consequences continue to climb as weather perils outpace existing resilience measures.
The authors write that we appear "individually and collectively, ill-prepared for the scale of these disasters." The report identifies several barriers preventing greater private-sector investment in resilience, including misaligned risk and return requirements among stakeholders. According to the Milken Institute, insurance markets are pulling back from vulnerable communities just as the need for protection grows most urgent, creating a widening gap between disaster exposure and financial capacity to respond.
The report explains that the speed and intensity of modern extreme weather events have outstripped traditional disaster planning and financing models. Heat domes that linger for weeks don't just threaten lives—they disrupt entire regional economies. Fires that explode in intensity within hours give communities no time to mobilize defenses. This mismatch between old assumptions and new realities leaves both public budgets and private capital inadequate to the task. The Milken Institute argues that current policy and investment frameworks weren't designed for this scale of repeated, overlapping catastrophes, which explains why insurers are retreating rather than expanding coverage in the places that need it most.
The report recommends innovative financing frameworks that bring together multiple stakeholders with different risk tolerances and return expectations to invest in resilience at scale. It lays out building blocks for community resilience and proposes mechanisms to align public, private, and institutional capital around shared protection goals. The message is clear: without new financial tools that match the speed and scope of climate threats, communities will continue facing disasters they can't afford to prevent or recover from.