The Big Question: Are Insurers meeting the needs of risk managers when it comes to the biggest risks businesses face?

2025 has so far been defined as a year of major emerging risk trends. The Californian wildfires have been a stark reminder of the threat posed by the world’s changing climate.

This month has seen Valencia once against hit by a cyclonic storm which unleashed torrential rain and marble-sized hail across the region, flooding towns and reviving still bitter memories of last year’s severe flooding caused by storm Dana.

Geopolitical risks have risen with the war in Ukraine still raging and the conflict in Gaza still no nearer to a solution. This is coupled with the swath of tariffs imposed by the Trump administration which has created real risks of a global trade war.

The rapid rise of artificial intelligence and the benefits it will undoubtedly bring have been tempered by the risks that come with the technology particularly in the hands of bad actors. Recent high profile cyber-attacks on major retail organisations in the United Kingdom have reinforced the need for business to ensure they understand the risks posed by the growing use of technology.

The changing way in which global business operates has created the need for anew skillsets and it has only intensified the war for talent in every part of the world.

Combined these emerging risks have created a fast-evolving risk landscape and increased the demand for innovative solutions from insurers which are racing to access the data in which they can base their underwriting and pricing decisions. It has also raised questions as to how well insurers are responding these changing demands from their clients.

Ian Summers, Global Business Leader, AdvantageGo.

European risk management associations FERMA published its inaugural NEXT (New Exposure Trends) report this month, which warns that short-term thinking and cognitive biases at all levels are leaving companies and governments highly vulnerable to the widespread and long-lasting impacts of emerging risk trends such as geopolitical shifts and climate change.

The report identifies four medium-to-long-term risks with the greatest potential to disrupt European businesses. These are:

• — Geopolitical Shifts – Significant transformations in the global political landscape are creating high levels of uncertainty and instability that will affect trade, investment, and supply chains.
• — Technological Acceleration – Rapid advancements in technologies such as AI, automation, and biotechnology are revolutionising businesses and society, but also create risks such as job displacement, ethical dilemmas, and reduced European competitiveness.
• — Human Capital – Attracting, developing, and retaining talent is becoming increasingly challenging, further complicated by evolving skill requirements and changing employee expectations.
• — Climate Change – A shifting climate presents major risks to businesses, the insurance industry, and society, while also increasing the likelihood of legal actions against corporations in the EU.

The study also encourages organisations to embrace more holistic thinking to better recognise the increasingly interconnected and interdependent nature of risk.  Further, by identifying key factors influencing each of these longer-term trends, it enables risk managers to develop credible scenarios adapted to the specific dynamics of their respective organisations.

Typhaine Beauperin, CEO of FERMA says the risks are great and that insurers need to look at how they can better engage with risk managers to meet these emerging risks.

On the current geopolitical risks she says: “The current geopolitical tensions increase unpredictability and can cause disruptions across supply chains, financial markets, and regulatory environments. To effectively manage these risks, risk managers need to embed geopolitical considerations into their strategic decision-making and proactively monitor evolving developments. This proactive approach can include integrating geopolitical risk into business continuity plans and ensuring strong partnerships for resilience.”

Resilience will be vital in the years ahead and Beauperin says there are steps that need to be taken in an effort to boost the ability to manage the ever more complex geopolitical environment.

“To boost resilience, risk managers should use foresight methodologies to prepare for various geopolitical scenarios. Two examples are presented in the report. Business continuity plans must account for high-impact geopolitical risks, as well as the diversification of trade partners to reduce dependencies.”

She adds: “The biggest concerns regarding flashpoints like Gaza, Ukraine, and Taiwan, along with potential isolation and trade wars, include the risk of escalating conflicts, destabilisation of the global economy, and the undermining of international law. These tensions can lead to fragmented alliances, increased barriers to trade, and heightened uncertainty for businesses and nations. Moreover, they may challenge the existing multilateral governance structures, which are already strained.”

It is in the response to the threats posed by the changing climate that the disconnect between risk managers and insurers is currently greatest.

At the press conference to launch the report concerns were expressed over the response of the insurance industry to the rising climate risks. The feeling that the sector is leaving its clients to face the rising risks alone.

“Yes, there are significant concerns regarding the insurance industry’s response to rising climate risks,” adds Beauperin. “According to the FERMA Global Risk Managers Survey 2024, 53% of risk managers fear that some of their business activities and/or location may become uninsurable in the future, with climate risks (73%) ranking as the most probable area where coverage might withdraw.

“As climate-related disasters increase, insurers face mounting losses, which may lead to reduced coverage options and higher premiums for clients. This situation effectively leaves many organisations to manage escalating risks without adequate support from their insurers. Additionally, the evolving nature of climate risks means that traditional protective measures may no longer suffice, underscoring the need for insurers to adopt a proactive, integrated approach to climate risk management.”  

Beauperin stops short of saying the concern over the approach by insurers to climate risks may impact their ongoing relevance to risk managers but says companies will need to create a strategy to where insurance involvement to revised and reevaluated.

“In terms of what should risk managers be doing to tackle climate threats, the growing concern as regards the insurability of critical risks is driving significant changes in how risk managers are approaching risk retention and insurance coverage,” she explains.

“We see a growing interest in captives and alternative risk transfer methods, as traditional insurance coverage continues to face reductions, particularly in natural catastrophe and property damage areas.”