Key Takeaways

• Systemic risks have become a top concern for risk managers and business owners 
• These risks are unpredictable, hidden and interconnected — events that could disrupt a business, community or entire industry 
• Top risks stem from cyber threats, geopolitical issues impacting growth and inflation, supply chain fragility, climate disruptions and workforce instability 
• Mitigating systemic risks requires a proactive, holistic and tailored approach

The days of treating risks as isolated incidents are over. As we move deeper into 2025, business owners need to rethink how they view risk. Today’s most damaging challenges are deeply connected, compounding and often lurk beneath the surface until they create serious disruption. These are systemic risks — and they are the future of risk worldwide. 

The Growing Concern Over Systemic Risks

Systemic risks have become a top concern for risk managers and business owners because they are, by nature, difficult to predict. Systemic risks aren’t just about one company or industry; they spread across supply chains, economies and entire markets. These are the risks you never see coming or assume will never happen. Many lie hidden within layers of interdependencies — such as vulnerabilities in a supply chain, overreliance on a single vendor, unmonitored cybersecurity gaps, geopolitical events or weak workforce retention strategies. 

All businesses are vulnerable to systemic risks. If left unchecked, they can cause major problems that derail operations for extended periods of time. Many business owners assume they have all their bases covered, only to find out that an unexpected factor has disrupted their operations. Mitigating these risks requires a company-wide, strategic response rather than a reactionary, siloed approach. 

Top Systemic Risks  

Systemic risks are especially dangerous and disruptive because they may be non-obvious in your business model. In 2026, business leaders must work diligently to uncover hidden systemic risks before falling victim. The top systemic risks most likely to impact operations across sectors include: 

Artificial Intelligence and Cybersecurity Risks

Cybersecurity risks are among the most significant dangers facing businesses today and one of the most prevalent categories of systemic risk. Cyberattacks have evolved beyond data breaches and can halt entire operations. 

The increasing 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, such as water treatment plants or oil and gas companies. 

How businesses use emerging technology adds another risk factor. AI and data-privacy-related litigation risks are also surfacing, posing regulatory and reputational concerns. 

Supply Chain Fragility and Disruptions

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 vendor or supplier may seem cost-effective, but it creates a vulnerability when that supplier experiences a disruption. Business leaders must keep a keen eye on vendor 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. Industries like transportation and manufacturing are particularly vulnerable to these disruptions, but supply chain issues can affect businesses of all sizes and industries.

Climate Change and Extreme Weather Events

Climate change poses an ever-growing systemic risk to businesses, disrupting global economies, infrastructure, workforces, supply chains and insurance markets. 

Natural disasters don’t just cause physical damage and halt operations; they can also cut off suppliers, push out employees living in the area and damage critical infrastructure businesses rely on. Today, nowhere is safe from the impacts of climate change. Asheville, North Carolina, long considered a climate “safe haven,” recently experienced unprecedented flooding, despite FEMA’s flood maps noting the city as outside of a flood risk zone. Businesses must prepare for severe weather events regardless of location. 

Workforce Instability and Human Capital Risk

Human capital challenges are systemic, threatening business stability nationwide. It is becoming increasingly difficult to attract and retain skilled employees. Rising wage demands, shifting workforce expectations and an aging labor pool are driving high turnover rates and talent shortages. 

The adoption of AI and automation is also reshaping job markets, requiring businesses to invest in reskilling and workforce development. Companies that fail to address these workforce challenges may face significant losses and ongoing damage to their business. 

Geopolitical Risks

Businesses can focus too closely on the obvious and immediate risks threatening their operations, overlooking the alarming impact of large geopolitical risks outside their control. Regional instability, regulatory changes and compliance challenges are all looming systemic risks companies must consider and prepare for as much as possible when developing a holistic risk management strategy. 

Recent notable 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 across the world from where you do business, has a profound ripple effect on business operations globally. 

Additionally, as governments worldwide introduce new policies, businesses are facing greater regulatory scrutiny. AI governance, data privacy laws and climate regulations are rapidly evolving, creating compliance challenges that can lead to significant financial penalties and operational disruptions. 

Regulatory uncertainty will continue to be a pressing concern, particularly for industries heavily impacted by shifting policy landscapes.

Social Inflation and Rising Litigation Costs

The cost of claims and litigation settlements continues to rise at an alarming rate, driven by factors like larger jury awards, public sentiment and evolving legal trends. This creates pressure on insurers and businesses. Once primarily a concern for the transportation sector, this trend is now affecting businesses across industries. 

Nuclear or thermonuclear verdicts (verdicts exceeding $10 million or even $100 million) or multiple large jury awards represent systemic risks that could derail the financial stability of a business. 

Protecting 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 For Mitigating Systemic Risks

• Holistic, tailored risk management: Conduct organization-wide risk heat mapping and scenario planning to uncover hidden dependencies and weak points. Systemic risks manifest differently across sectors and businesses, so be thorough. Focus on risks specific to your business. By mapping out potential disruptions and their financial impacts, companies can develop strategic mitigation plans.
• Focus on proactive strategies: Identify interconnected risks to prevent ripple effects and curb widespread losses.
• Diversification: Avoid being overly reliant on a single supplier, software provider or workforce strategy.
• Cybersecurity investment: Strengthen internal security frameworks and vet third-party vendors rigorously.
• Workforce resilience: Implement retention and training programs to address talent challenges. 
• Regulatory compliance: Partner with risk management consultants who can help your organization effectively navigate regulatory challenges and changes.
• Align insurance coverage with business needs: Review your insurance as a key part of protecting against systemic risks. View it as a central component in your strategic risk management framework, rather than a mere 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 address interconnected, structural vulnerabilities head-on will build resilience against the unpredictable challenges of 2026 and beyond. 

John Meder