As 2026 gets underway, companies are stepping into a business landscape filled with fast‑moving risks and heightened uncertainty. From evolving legal pressures to increasingly sophisticated cyber threats, the challenges facing organizations today demand thoughtful preparation. Having the right insurance protection, paired with strong risk management practices, can make a major difference in a company’s long‑term stability.
Below are six major risks businesses should keep on their radar this year.
1. Social Inflation and Expanding Nuclear Verdicts
Large jury awards—often exceeding $10 million—are becoming more common, and they continue to drive up liability insurance costs across multiple industries. These massive awards, sometimes called nuclear verdicts, have been rising due to a mix of factors. Third‑party investors are increasingly funding lawsuits, younger jurors tend to challenge corporate defendants more aggressively, and emotional courtroom strategies are influencing higher settlement numbers.
Industries like healthcare, automotive, and manufacturing are feeling the greatest impact. Some insurers are experimenting with artificial intelligence to forecast litigation risks, while lawmakers in several states are debating reforms aimed at curbing excessive jury awards. Even with these developments, social inflation remains a highly unpredictable and expensive risk for businesses in 2026.
2. Cybersecurity Challenges and AI‑Enabled Attacks
Cybercriminals are becoming more advanced, and many are using artificial intelligence to enhance their attacks. These threats range from ransomware-as-a-service groups to automated tools designed to breach systems, steal sensitive information, and disrupt daily operations. A single incident can lead to costly downtime, regulatory penalties, and reputational damage.
To stay ahead of these risks, companies must treat cybersecurity as an ongoing priority. That means implementing multi‑factor authentication, deploying tools that detect and respond to threats in real time, keeping software regularly updated, and training employees to spot warning signs. Many cyber insurance policies now require organizations to meet strict security criteria, reinforcing the idea that prevention and coverage must work together.
3. Natural Catastrophes and Climate‑Related Losses
Extreme weather events—including hurricanes, wildfires, and major flooding—are striking more frequently and causing heavier damage. As losses rise, many businesses located in vulnerable areas are seeing higher property insurance premiums or losing access to certain types of coverage altogether. In some regions, insurers have stopped writing new policies entirely due to unsustainable risk levels.
To keep coverage accessible and reduce vulnerability, many organizations are investing in stronger building materials, improved site designs, and enhanced fire or storm‑resistant features. Some are turning to parametric insurance, a model that pays out when pre‑defined conditions such as wind speed or rainfall are met, bypassing the long assessment process typical of traditional claims. For many companies, planning for severe weather has become an essential part of long‑term resilience.
4. Ongoing Supply Chain Issues and Business Interruptions
Global supply chains continue to experience instability as a result of shipping delays, shortages of raw materials, and geopolitical conflicts. These disruptions can affect companies even when they aren’t directly impacted—one supplier’s downtime can ripple through an entire network and halt operations.
To stay protected, businesses are exploring insurance options tailored to supply chain volatility. Coverage may extend to supplier failures, transportation breakdowns, or even cyber incidents affecting logistics partners. With the right policies in place, businesses can better navigate unexpected slowdowns and keep operations moving when external challenges arise.
5. Increasing Regulatory Demands and Legal Complexities
Regulatory expectations are evolving faster than ever, especially in areas like consumer data privacy, sustainability reporting, and environmental standards. These changes can expose companies to compliance risks, unexpected expenses, or fines if they fail to keep up.
Legislation such as the California Consumer Privacy Act (CCPA) continues to influence how businesses handle data. In Europe, updated consumer protection rules make it easier for individuals to pursue legal action. Even insurance carriers now face tighter compliance standards, which can influence policy structures and coverage terms. For businesses, regularly reviewing insurance policies and identifying areas where new regulations could create gaps is more important than ever.
6. Technology‑Driven Operational Risk
Automation, artificial intelligence, and cloud‑based platforms are becoming foundational tools for many companies. While these technologies can streamline workflows, they also bring new vulnerabilities. System downtime, software bugs, or flawed AI‑generated decisions can trigger operational delays, financial losses, and even legal consequences.
In response, insurers are offering more options designed to cover tech-related failures or system outages. Still, companies must ensure that their digital infrastructure is secure, updated, and supported by clear internal policies. Pairing strong tech governance with tailored insurance coverage can help prevent costly disruptions.
Prepare for a Connected Risk Environment
The challenges businesses face in 2026 are closely linked—one issue can quickly escalate into another. That’s why proactive planning is essential. Reviewing insurance policies regularly, updating risk strategies, and staying informed about emerging threats can help protect your business from costly setbacks.
If you’d like support evaluating your coverage or identifying areas that may need extra protection, we’re here to help. Reach out to schedule a risk review tailored to your organization.