Physics of Climate Finance: Risk, Resilience, and Systemic Stability in a Warming World

Climate change has emerged as one of the most profound challenges facing the financial system in the 21st century, through both physical and economic channels. Extreme weather events, sea-level rise, and global warming trajectories not only damage physical assets and productivity directly, but also trigger significant economic disruption through complex supply-chain, trade, and financial networks. Traditional equilibrium models and linear forecasting tools fall short of capturing the nonlinear feedback, tipping points, and cascading failure risks inherent in the climate-economy system. Climate risk is, at its core, a complex systems problem, and new perspectives from physics, network science, and social dynamics are urgently needed to understand how micro-level interactions give rise to systemic instability at the macro level.The goal of this Research Topic is to foster cross-disciplinary innovation at the intersection of social physics and complex systems science in climate finance, and to develop a new generation of climate-economic models that quantify the pathways through which climate risk transmits into financial instability.Specific objectives include:• constructing a complete analytical chain, from physical climate events through the decisions of economic agents to cascading effects within financial networks• capturing the nonlinear feedback, tipping points, and cascading failures that equilibrium and linear forecasting approaches cannot represent• identifying vulnerabilities and assessing the resilience of financial systems to climate shocks• developing forward-looking risk-management and early-warning tools for policymakers and financial institutionsBy achieving these goals, this collection aims to provide policymakers and financial institutions with a theoretical basis for anticipating climate–financial instability, and to offer robust scientific support for the orderly transformation of the global economy in the context of accelerating climate change.This Research Topic welcomes contributions that apply the tools of physics, complexity science, and network theory to climate-related financial risk. Themes of interest include, but are not limited to:• Nonlinear, multi-scale modelling of climate–economy systems, integrating physical climate scenarios, transition pathways, and macroeconomic–financial dynamics• Network-based analysis of climate-risk propagation through banking, insurance, and supply-chain networks• Agent-based simulation of heterogeneous economic actors under climate uncertainty, policy intervention, and evolving risk perceptions and expectations• Early-warning signals for climate–financial tipping points, applying physics-based approaches to detect impending regime shifts in markets• Transition risk and stranded-asset valuation, including the feedback effects of low-carbon policy on portfolio stability and capital flows• Impacts of extreme weather events and climate-related disclosure on market volatility, liquidity, and investor behaviourWe invite Original Research, Review, Mini Review, and Perspective articles. All contributions must apply methods from physics, complexity science, or network theory, and demonstrate clear relevance to the mechanisms linking climate risk to financial stability. Topic editors: Xiaoyun Xing, Boyao Li Source: https://www.frontiersin.org/research-topics/85316/physics-of-climate-finance-risk-resilience-and-systemic-stability-in-a-warming-world