2026 MARKET TRENDS

Risk Management

Key Takeaways

Organizations must integrate technology, people and processes to anticipate, adapt and recover from interconnected threats like climate volatility, cyber incidents and supply chain disruptions
Social inflation, including “nuclear” and “thermonuclear” verdicts and rising loss severity driven by economic inflation, is increasing liability costs, premiums and litigation expenses across industries
Businesses should adopt predictive analytics, break down silos and explore alternative risk transfer solutions to navigate the evolving risk landscape effectively
The rapid adoption of AI in claims processing and predictive modeling creates efficiencies but also raises uncertainties about its long-term impact on staffing and processes

More businesses are looking to captives to manage claims and realign their risk strategy.

Overview

Systemic risks remain a defining challenge for risk managers and business leaders, demanding a focus on enterprise-wise preparedness and resiliency. Key systemic risks — such as climate volatility, cyber incidents, supply chain disruptions, geopolitical instabilities and demographic shifts — can trigger large losses and create wide-reaching ripple effects, both domestically and globally. These damaging threats no longer fit neatly in one category. They move across borders, industries and business models in ways that are interconnected, compounding and increasingly unpredictable.

To effectively respond and recover from systemic risks, organizations should integrate technology, people and processes across all levels. The focus of risk management is no longer just on avoiding disruptions, but on anticipating, adapting and recovering quickly as these interconnected risks unfold.

Market Conditions

In addition to the increased nature of systemic risk, specific claim trends are gaining prominence across various industries.

Rising liability costs

General liability, auto liability, and products liability are all experiencing a rise in nuclear and thermonuclear verdicts. These multi-million-dollar judgments are increasing insurance premiums significantly. As a result, many companies are forced to take on higher deductibles or explore alternative risk financing structures to keep costs manageable. The cost of litigation has also become a significant and disruptive expense for businesses.

Healthcare claims

In the healthcare sector, professional liability claims have reached an all-time high in terms of value. Reports show the average healthcare malpractice verdict soared from $27 million in 2019 to $56 million in 20241, a trend driven by social inflation and third-party litigation funding. Furthermore, heightened anxiety around restricted access to healthcare may lead to an increase in workers’ compensation claims, potentially raising premium costs for employers.

Sexual abuse and molestation

Another area of concern is the sharp increase in the frequency and severity of sexual abuse and molestation (SAM) claims. Carriers are responding by limiting coverage within standard policies and enforcing more stringent underwriting guidelines for separate SAM policies. Institutions now face greater exposure not only for direct actions but also for claims of negligent supervision, hiring and retention.

Tariffs and the False Claims Act

In 2025, businesses are under increased scrutiny regarding supply chain transparency and regulatory compliance. Any misrepresentation, such as failing to accurately disclose material origins, classifying goods incorrectly or undervaluing products to reduce duties, can trigger significant claims and penalties under the False Claims Act, highlighting the need for rigorous documentation and transparency.

D&O risks from AI and cyber programs

Boards are facing heightened scrutiny after cyber incidents, with derivative claims arising when organizations lack strong oversight of cybersecurity and AI governance. Companies that fail to establish clear policies or overstate their cyber and AI capabilities are at increased risk of litigation and examination of their insurance coverage.

Inflationary pressures on property claims

Property insurance claims continue to face pressure from economic inflation, driven by rising construction, labor and material costs and higher replacement values. This results in greater loss exposure for carriers.

AI adoption in risk management and claims

The rapid integration of AI across claims intake, reserving practices and predictive modeling is transforming processes and creating new efficiencies, but it’s also raising uncertainties about long-term impacts, including changes in adjuster roles and reduced staffing needs.

1 Risk & Insurance. Inflation Drives $4 Billion Surge in Medical Malpractice Losses Over Past Decade

Impacts & Considerations

To help manage this evolving risk landscape and improve business outcomes, organizations need to prepare for 2026 and beyond by considering the following risk management strategies:

Break down silos across the enterprise (risk, HR, operations, cyber and IT departments) to coordinate readiness, response and recovery, as fragmented approaches cannot keep up with interconnected threats

Map interdependencies and use predictive analytics to help better understand how risks cascade across departments, partners, vendors and geographies, enabling earlier detection and faster intervention

Expand risk transfer through innovative solutions, such as parametric insurance, captives and alternative structures, to play a significant role in filling gaps left by traditional coverage as systemic risks intensify

Shift mindset from avoidance to adaptation — the goal isn’t to eliminate disruption; it’s to anticipate, withstand and recover from it more effectively

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