As 2026 kicks off, companies are navigating a business landscape that feels more volatile than ever. Rising litigation costs, increasingly sophisticated cyber threats, and climate‑related losses are reshaping how organizations think about protection. Staying ahead of these challenges—and keeping insurance coverage aligned with them—has become essential for long‑term stability.

Below are six major risk areas every business should keep an eye on this year.

1. Social Inflation and Escalating Nuclear Verdicts

Massive jury awards—often topping $10 million—are becoming more frequent across the country. These so‑called nuclear verdicts are pushing liability premiums higher and making coverage more difficult to secure. This trend, known as social inflation, is fueled by third‑party litigation funding, younger jurors’ distrust of large corporations, and emotional courtroom strategies that encourage outsized settlements.

Industries such as healthcare, manufacturing, and automotive are feeling the impact most sharply. Some insurers have begun using artificial intelligence tools to better evaluate legal exposures, while several states are exploring new reforms aimed at curbing extreme jury awards. Even so, social inflation remains one of the most unpredictable and costly risk factors in 2026.

2. Cyber Threats Deepened by AI‑Enhanced Attacks

Cybercrime continues to grow more aggressive, and artificial intelligence is giving attackers new tools to outsmart even well‑prepared businesses. Ransomware‑as‑a‑service, phishing schemes powered by realistic AI‑generated content, and rapid‑moving data breaches can disrupt operations, compromise sensitive information, and lead to significant financial and legal fallout.

Companies must now take a layered approach to cybersecurity: multi‑factor authentication, advanced detection and response platforms, employee awareness training, and consistent software updates. Cyber liability insurance remains a critical safeguard, but most carriers now require strict security protocols before offering coverage. Strong cyber hygiene is no longer optional—it directly affects insurability.

3. Climate‑Driven Catastrophes and Rising Property Losses

Extreme weather events—including floods, wildfires, and storms—are happening with greater frequency and severity. Businesses in high‑risk regions are experiencing dramatic increases in property insurance costs, and in some areas, carriers are scaling back coverage or exiting markets entirely.

To better manage exposure, many organizations are investing in resilient building upgrades designed to withstand climate‑related hazards. Others are turning to parametric insurance products, which trigger payouts when specific conditions like wind speeds or rainfall thresholds are met—no lengthy loss assessments required. Proactive planning is now essential for keeping coverage affordable and ensuring quick recovery after a disaster.

4. Supply Chain Instability and Business Interruption

Global supply chain volatility continues to ripple across nearly every industry. Ongoing shipping delays, raw material shortages, regional conflicts, and geopolitical tensions can slow production or halt operations altogether. Even if a company is not directly harmed, disruptions affecting a key supplier or transport route can be just as damaging.

To mitigate this uncertainty, businesses are increasingly seeking insurance options that cover contingent business interruption, supply chain breakdowns, or cyber incidents affecting logistics partners. These add‑on protections can help keep operations running when unpredictable world events interfere with the flow of goods and materials.

5. Regulatory Shifts and Expanding Compliance Obligations

Regulatory landscapes are evolving rapidly—particularly in areas like data privacy, sustainability reporting, and environmental standards. Staying compliant requires constant monitoring, and missteps can lead to fines, lawsuits, or uncovered claims.

Legislation such as the California Consumer Privacy Act (CCPA) continues to push organizations to strengthen data governance practices. Meanwhile, new rules in Europe are giving consumers more avenues for legal recourse. Even insurers must adapt to heightened regulatory scrutiny, which can influence the terms and exclusions of the policies they provide. Regular policy reviews are critical to ensuring coverage keeps pace with shifting legal requirements.

6. Technological Dependence and Operational Tech Risks

Automation, machine learning, and cloud‑based software have become everyday business tools—but they introduce new vulnerabilities. A malfunctioning algorithm, system outage, or integration failure can lead to lost revenue, compliance problems, or customer dissatisfaction.

Some insurers now offer specialized policies that address tech‑driven disruptions, yet businesses must still implement strong technology governance. This includes regular updates, responsible AI usage, and consistent monitoring of digital tools. Balancing insurance with strategic tech management is key to avoiding costly operational setbacks.

Prepare for a Connected Risk Landscape

In 2026, business risks are increasingly interconnected. A cybersecurity breach can trigger legal exposure; a supply chain interruption can create regulatory complications; a natural disaster can lead to business interruption across multiple regions. Because of this, companies benefit greatly from proactive planning.

Routine policy evaluations, updated risk management strategies, and awareness of emerging threats can go a long way toward strengthening resilience. Staying informed—and staying covered—helps ensure your business remains prepared for whatever the year brings.

If you’d like support reviewing your policies or identifying potential coverage gaps, give us a call. We’re here to help you assess your unique risks and build a protection plan tailored to your industry.