On January 17th 2013 the Actuarial Profession launched a major report entitled "Resource constraints: sharing a finite world". The Institute and Faculty of Actuaries wanted to examine the implications of the findings of limits to growth on financial markets and consequential impacts on actuarial advice. The report brought together the research undertaken as part of this endeavour, led by the Global Sustainability Institute (GSI) at Anglia Ruskin University.

In 1972 Limits to Growth was published by the Club of Rome. This report examined the resource and political constraints that existed at the time and made predictions for the constraints this would put on global growth over the upcoming decades. Resource constraints, or price increases, will have different implications for financial decisions depending on a number of factors, including the way politicians respond to the challenge of scarce resources. For example, asset values could increase dramatically if the resource is managed through price signals (so an oil reserve will have a much larger valuation if the oil price is significantly higher because it is a scarce resource) or asset values could reduce dramatically if it is managed through limitations in usage (so all of the oil in a particular reserve cannot be used).

How resources constraints impact the economy is complex, uncertain and depends on a number of factors. To a large extent the impacts could be managed, or at the very least influenced. If resource constraints do end up providing a limit to economic growth this will have a significant impact on a country's finances and may result in countries needing to balance their budgets in the future. This is particularly true of heavily indebted countries (such as the US and several European countries) where economic growth and inflation is vital to reducing the debt burden over time and where this economic growth could be curtailed by resource limits. Therefore, a systemic risk in these economies may exist.

The evidence for resource constraints is overwhelming and perhaps surprisingly the global economy remains relatively blind to this issue. Particular resources will have local impacts (such as water) while other will have global impacts (such as oil). Political and market responses to the challenges faced by resource constraints will have far reaching consequences which need to be better understood and better modelled. However, it is important to note that the consequence of not tackling this issue (continuing with a business as usual model) is not merely lower returns on investments but a collapse of a connected international society. Modelling such a high impact, low probability event is critical not just for actuaries but also for society as a whole.

Savings vehicles have evolved in a particular economic and legislative environment, this report questions whether the future may be different. If we were to enter into a time of low economic growth and therefore low asset returns, what would this imply for the design of such a vehicle, its viability or even the economic justification for saving? Does a 'no growth' economy allow us to innovate and develop a new accounting methodology or does it distract us from our real challenge? Will the increasing cost of resources result in investments into new methods of doing things or merely increase our investments into business as usual? Will any individual, organisation or sector take responsibility for managing a transition to a new economic paradigm or will society force this responsibility onto them in time (or too late)?

The actuarial profession is very well placed to explore these complex risk issues in more detail.