Artificial intelligence, cyberattacks or outages, and extreme weather events are the risks partners at global insurance law firm Kennedys perceive will have the biggest impacts on their markets in the next year, according to a new risk forecast.
The firm’s partners are also wary of the impacts of geopolitical instability and economic volatility. Meanwhile, sustainability issues — once a significant focus — have dropped to the bottom of the .
Late last year, Kennedys presented its partners with the following 10 risks and asked them to provide perspectives on the size of impact, expected timeframe for peak impact, and change in concern since the previous year for each risk.
The results were ranked by assigning a sliding scale of points to the given answers. More than 170 partners from 17 countries responded to the survey.
Global Survey Risk Ranking
- Adoption of AI
- Cyberattacks or Outages
- Extreme Weather Events
- Geopolitical Instability
- Economic Volatility
- Social Inflation
- Use of Evolving Technologies
- Shifting Regulatory Landscape
- Civil Justice Reforms
- Increased Focus on Sustainability
It is important to note that regional differences highlight varying concerns in the findings.
In the United States, for example, greater attention was found on the growing challenge of social inflation, which encompasses increasing litigation, expanded liability definitions, plaintiff-friendly court decisions, and higher compensatory jury awards.
More than 82% of U.S. respondents cited social inflation as having a moderate (35%), large (37.5%) or severe (10%) risk rating. Forty-one percent of U.S. respondents remain as concerned about social inflation as last year, while 46% reported experiencing a slight increase in concern and 13% reported a significant increase.
The Kennedys forecast lists social inflation, AI adoption and geopolitical instability as North America’s top three issues of increasing concern. All regions highlighted geopolitical instability as a risk, significantly so in responses from the Asia-Pacific, Latin America and the United Kingdom.
Artificial Intelligence Adoption and Regulation
A total of 17% of Kennedys’ global partners named AI adoption their issue of greatest concern.
The firm said the next two to three years “will see the emergence of a new global regulatory framework for AI technology.” But as AI is extensively adopted across business lines, global regulation to date has been uneven, with Kennedys concluding that “different regions think differently about how opportunity should be balanced with risk.”
“How that process unfolds will have fundamental impacts on how businesses operate,” Kennedys said in the report. “Entities using AI in their service or trade proposition must stay alive to important considerations, including: How accurate, ethical and safe is the data being used in an AI tool? Is there adequate knowledge of the extent to which AI tools are being utilized, and the potential cover exposures that this could bring?”
Still, being nimble and embracing the change AI will bring is the only survival option, said Tom Pelham, global head of cyber and data at Kennedys. Sticking to traditional ways of working and interacting with the world “will make insurers and corporates obsolete and alienate them from an increasingly large sector of the population that will take the technological change in its stride,” he said.
“When looking out over a five-year horizon, more than 85% of Kennedys global partners cited adoption of AI as the event which will have the highest risk impact, highlighting that the impact of AI, which is already high, is only set to grow further,” Kennedys said.
The firm advised that insurance products must contain clear, unambiguous language to avoid a dispute from a gap in cover or unintended cover.
“Insurers need to offer a product with a robust claims protocol that understands these AI risks and the real exposure their clients are facing,” said Javier A. Vijil, a North American partner. “Might we see the creation of a new class of insurance products built specifically for underwriting AI-related risk?”
Cybercrime
Although AI was overall the biggest risk, those surveyed felt the true impact of this would not be felt for three to five years, while risks such as social inflation and cyberattacks posed more of an immediate threat.
Sixteen percent of Kennedys’ partners reported cyberattacks as the most concerning issue in 2025. More than one in four partners (27%) in Europe, the Middle East and Africa listed cyberattacks as their chief concern.
Kennedys explained that AI tools have expanded the attack surface for cybercriminals and that AI is increasingly being used in cybercrime, including social engineering, malware and fake AI chatbots.
“Given insurers handle large volumes of sensitive customer data, they are attractive targets and need to stay ahead in their cybersecurity measures,” the report said. A failure to do so could, in the event of an attack, expose personally identifiable information, which attracts severe legal, financial and reputational consequences.”
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