Insurers face new exposure as geopolitical conflict becomes a leading business risk

Core Insights - Geopolitical conflict is identified as the most significant risk impacting businesses in the next 12 months, with 40.0% of respondents in a GlobalData poll highlighting its importance [2] - Aon's 2025 Global Risk Management Survey indicates that geopolitical volatility has entered the top ten global risks for the first time in its 19-year history, reflecting the interconnectedness of global markets [3] Business Impact - Ongoing geopolitical tensions are disrupting global supply chains, causing energy market volatility, and increasing regulatory uncertainty for businesses [2] - The survey results show that high inflation (32.7%), digitalisation (10.4%), and cybersecurity (9.9%) are viewed as lesser risks compared to geopolitical conflict [2] Insurance Industry Response - The rise of geopolitical risk presents both challenges and opportunities for insurers, as traditional models may not adequately cover the consequences of political instability [4] - Insurers are encouraged to adopt scenario modeling and geopolitical risk mapping to better understand the cascading effects of regional tensions on global markets [4] Strategic Recommendations - Strengthening partnerships with risk intelligence providers and developing parametric or event-based products can facilitate faster payouts in volatile environments [5] - Proactive client engagement is essential, with insurers playing a strategic advisory role to help clients quantify geopolitical exposure and integrate risk mitigation into broader resilience plans [5]