Key takeaways
- Systemic risks have become a major concern of risk managers and business owners
- These risks are unpredictable, hidden and interconnected: events that could disrupt a business, a community or an industry as a whole.
- The main risks come from cyber threats, geopolitical issues impacting growth and inflation, supply chain fragility, climate disruption and workforce instability.
- Mitigating systemic risks requires a proactive, holistic and tailored approach
The days of treating risks as isolated incidents are over. As 2025 approaches, business owners need to rethink their perception of risk. Today’s most damaging challenges are deeply intertwined, compounding, and often lurk beneath the surface until they cause serious disruption. These are systemic risks – and they represent the future of risk around the world.
Growing concern about systemic risks
Systemic risks have become a major concern of risk managers and business owners because they are, by nature, difficult to predict. Systemic risks do not only concern a company or a sector; they spread across supply chains, economies and entire markets. These are risks you never see coming or think will never happen. Many of them hide in layers of interdependencies, such as vulnerabilities in a supply chain, overreliance on a single supplier, unmonitored cybersecurity breaches, geopolitical events, or weak workforce retention strategies.
All businesses are vulnerable to systemic risks. If left unchecked, they can cause major problems that will derail operations for long periods of time. Many business owners assume that all their bases are covered, only to discover that an unexpected factor has disrupted their operations. Mitigating these risks requires a strategic, enterprise-wide response rather than a reactionary, siled approach.
Main systemic risks
Systemic risks are particularly dangerous and disruptive because they may not be evident in your business model. In 2026, business leaders must work diligently to uncover hidden systemic risks before they fall victim to them. The key systemic risks most likely to impact operations across all sectors include:
Risks related to artificial intelligence and cybersecurity
Cybersecurity risks are among the most significant dangers facing businesses today and are one of the most prevalent categories of systemic risks. Cyberattacks have evolved beyond data breaches and can disrupt entire operations.
The growing use of AI by cybercriminals has given rise to more sophisticated phishing schemes, deepfake scams, and ransomware attacks that can be devastating. Companies must also consider the cyber vulnerabilities of their third-party vendors, as demonstrated by the CrowdStrike outage, and critical infrastructure providers, like water treatment plants or oil and gas companies.
How companies use emerging technologies adds another risk factor. Litigation risks related to AI and data privacy are also emerging, posing regulatory and reputational concerns.
Supply chain fragility and disruption
Supply chain disruptions are not new, but their systemic nature is becoming more pronounced. The fragility of global supply chains continues to expose businesses to significant risks. Overreliance on a single supplier may seem profitable, but it creates vulnerability when that supplier experiences a disruption. Business leaders should keep a close eye on supplier consolidation to mitigate this risk.
Persistent bottlenecks, geopolitical tensions, trade restrictions, tariffs, regional conflicts and climate change will continue to destabilize supply chains throughout 2025. Sectors like transportation and manufacturing are particularly vulnerable to these disruptions, but supply chain issues can affect businesses of all sizes and sectors.
Climate change and extreme weather events
Climate change represents an ever-increasing systemic risk for businesses, disrupting global economies, infrastructure, workforces, supply chains and insurance markets.
Natural disasters not only cause physical damage and disrupt operations; they can also cut off suppliers, evict employees living in the area, and damage critical infrastructure that businesses depend on. Today, no place is safe from the impacts of climate change. Asheville, North Carolina, long considered a climate “haven,” has recently experienced unprecedented flooding, despite FEMA flood maps indicating the city is outside a flood risk zone. Businesses need to prepare for extreme weather events, regardless of their location.
Workforce instability and human capital risk
Human capital challenges are systemic and threaten business stability nationwide. It is becoming increasingly difficult to attract and retain qualified employees. Rising salary demands, changing workforce expectations and an aging workforce are leading to high turnover rates and talent shortages.
The adoption of AI and automation is also reshaping labor markets, requiring companies to invest in reskilling and workforce development. Companies that fail to address these labor issues risk significant losses and continued damage to their business.
Geopolitical risks
Companies can focus too narrowly on the obvious and immediate risks that threaten their operations, neglecting the alarming impact of major geopolitical risks beyond their control. Regional instability, regulatory changes and compliance challenges are all looming systemic risks that businesses must consider and prepare for as much as possible when developing an overall risk management strategy.
Notable recent examples of highly disruptive geopolitical risks include the Russia-Ukraine and Israel-Hamas conflicts, which have impacted regional instability, inflation, growth and supply chains. Regional instability, even when it occurs anywhere in the world where you do business, has profound implications for global business operations.
Additionally, as governments around the world introduce new policies, businesses face increased regulatory scrutiny. AI governance, data privacy laws and climate regulations are evolving rapidly, creating compliance challenges that can result in significant financial penalties and operational disruptions.
Regulatory uncertainty will continue to be a pressing concern, particularly for sectors heavily impacted by changing political landscapes.
Social inflation and rising litigation costs
The cost of claims and settlements continues to rise at an alarming rate, driven by factors such as increasing jury awards, public opinion and changing legal trends. This creates pressure on insurers and businesses. Once a major concern for the transportation sector, this trend is now affecting businesses across all sectors.
Nuclear or thermonuclear verdicts (verdicts exceeding $10 million or even $100 million) or multiple grand jury awards represent systemic risks that could derail a company’s financial stability.
Protect yourself against unexpected risks
Addressing systemic risks requires a fundamental shift in how businesses approach risk management. Instead of reacting to crises as they arise, leaders must take a proactive stance, identifying potential risks before they become catastrophic.
Key strategies to mitigate systemic risks
- Comprehensive and adapted risk management: Perform organization-wide risk heat mapping and scenario planning to uncover hidden dependencies and weak points. Systemic risks manifest differently across industries and companies, so be thorough. Focus on risks specific to your business. By mapping potential disruptions and their financial impacts, businesses can develop strategic mitigation plans.
- Focus on proactive strategies: Identify interconnected risks to avoid ripple effects and limit widespread losses.
- Diversification: Avoid over-reliance on a single vendor, software provider or workforce strategy.
- Cybersecurity investment: Strengthen internal security frameworks and rigorously vet third-party vendors.
- Workforce Resilience: Implement retention and training programs to address talent challenges.
- Regulatory compliance: Partner with risk management consultants who can help your organization effectively address regulatory challenges and changes.
- Align insurance coverage with business needs: Review your insurance as a key part of protecting against systemic risks. Think of it as a core part of your strategic risk management framework, rather than just an annual renewal process. Are there better ways to finance your risk?
The future of risk is systemic and businesses must adapt accordingly. Business leaders who shift their approach and tackle interconnected structural vulnerabilities head-on will build resilience in the face of the unpredictable challenges of 2026 and beyond.