James Cook | Feb 10 2026 21:32
As 2026 gets underway, companies are navigating an environment marked by fast‑moving challenges and growing uncertainty. From escalating legal judgments to increasingly complex cyber threats, the landscape of business risk is shifting in real time. Staying properly insured and preparing for emerging threats is essential for long-term resilience.
Below are six major risks every business should pay close attention to this year.
1. Social Inflation and the Growth of Nuclear Verdicts
Large jury awards—often exceeding $10 million—are becoming more frequent, particularly in certain states. These massive rulings, commonly referred to as nuclear verdicts, are pushing liability insurance costs higher and making coverage harder to secure. The rise in these awards, known as social inflation, is being fueled by third-party litigation funding, shifting attitudes among younger jurors, and persuasive courtroom strategies designed to drive up settlement amounts.
Industries such as healthcare, automotive, and manufacturing are feeling the impact most intensely. Some insurers are experimenting with artificial intelligence to better forecast litigation exposure, while lawmakers are evaluating reforms aimed at curbing excessive verdicts. Still, despite these measures, social inflation remains one of the most costly and unpredictable challenges of 2026.
2. Cybersecurity Risks and AI‑Enhanced Attacks
Cybercriminals are becoming more sophisticated, using advanced tools—including AI-driven hacking methods and subscription-based ransomware services—to break into networks, compromise data, and halt business operations. A single cyber incident can lead to major expenses, regulatory fines, and long-term reputational damage.
To limit exposure, companies must implement comprehensive cybersecurity strategies. This includes multi-factor authentication, continuous threat monitoring, employee awareness training, and routine software updates. Cyber insurance has also become a crucial part of the equation, although most policies require businesses to meet specific security benchmarks. Today, prevention and insurance are inseparable pieces of effective cyber risk management.
3. Climate-Driven Events and Natural Disaster Losses
Severe weather events—such as hurricanes, wildfires, and flooding—continue to grow in both frequency and financial impact. Businesses located in high-risk regions are facing tougher property insurance markets, with rising premiums and, in some cases, insurers choosing to withdraw from certain areas entirely.
To build resilience, many organizations are investing in stronger infrastructure, upgraded materials, and improved building designs that can withstand extreme conditions. Others are turning to parametric insurance solutions that trigger payouts when specific measurable thresholds, like rainfall or wind speed, are met. This option provides faster access to recovery funds and reduces administrative delays. Preparing for climate-related disruptions is increasingly vital for business continuity.
4. Supply Chain Instability and Business Interruption
Global supply chains remain vulnerable, with issues such as transportation bottlenecks, material shortages, and geopolitical conflict causing significant delays. Even if a business does not experience a direct loss, disruptions affecting key vendors or shipping partners can still interrupt operations.
To mitigate these risks, some companies are adding specialized insurance coverage addressing supplier failures, trade interruptions, and even cyberattacks on logistics networks. These policies can help keep operations moving when unexpected events disrupt critical supply chain links. Building a proactive insurance strategy is essential for minimizing downtime.
5. Regulatory Shifts and Increasing Legal Complexity
Regulatory changes are coming at a rapid pace, particularly in areas such as environmental compliance, data privacy, and sustainability reporting. Businesses that fail to keep up may face new liabilities, operational costs, or legal penalties.
Regulations like the California Consumer Privacy Act (CCPA) and similar global standards are raising expectations for data handling and consumer protection. Meanwhile, new rules in Europe are expanding opportunities for consumers to bring legal action. Insurance carriers are also navigating tighter oversight, which may influence how policies are structured. For these reasons, businesses should routinely reassess their coverage to ensure no hidden exclusions or gaps conflict with evolving requirements.
6. Technology-Related Operational Risks
Organizations are relying more heavily on tools such as cloud platforms, automation systems, and artificial intelligence. While these technologies boost efficiency, they also introduce new forms of risk. System outages, faulty algorithms, or technology misuse can lead to downtime, financial losses, or legal complications.
Some insurers are responding with policies designed for system failures and tech-driven disruptions. However, companies must continue to strengthen their internal digital practices—keeping software updated, monitoring system performance, and ensuring responsible technology use. A combination of strong digital governance and appropriate insurance protection is essential for reducing exposure.
Prepare for a Dynamic 2026
The risks shaping 2026 are deeply interconnected, and one issue can easily trigger another. That’s why careful planning and proactive risk management are more important than ever. Regularly reviewing your insurance portfolio, updating internal policies, and staying informed about emerging threats can help safeguard your business for the long term.
If you’d like support reviewing your coverage or pinpointing potential vulnerabilities, give us a call to schedule a risk assessment tailored to your organization’s needs.