The Big Question: What’s the next black swan event for UKGI – and is the sector ready?

Caroline Dunn, chief underwriting officer at Zurich

As insurers, we should always be prepared for the next black swan event. While some risks are easier to anticipate, climate change stands out as a challenge we encounter daily, but its growing frequency and severity require renewed focus.

This trend gives us, as an industry, our best opportunity to prepare for events with wider-reaching implications for the UK, including unpredictable and unintended consequences that may arise.

Crucially, climate change is not just an environmental issue, it’s a trigger for physical losses such as flooding, which can lead to property damage, business interruption and cascading impacts across extensive supply chains.

Imagine if a major manufacturer’s operations were shut down due to a natural catastrophe – the ripple effects could extend far beyond the immediate property loss, into supply chains and the broader economy. This is especially the case if this coincides with widespread local disruption affecting people and their property, living and working in the area, compounding the social and economic impact.

While we have a vast array of historical data to inform our modelling, relying solely on the past is no longer enough. Forward-looking climate models that consider extreme scenarios are essential to build genuine resilience.

To truly prepare, it’s vital to bring specialist expertise into the business and enhance our risk modelling and data analytics capabilities.

At Zurich, we’ve invested heavily in these capabilities through Zurich Resilience Solutions, helping us anticipate and mitigate emerging risks. Scenario planning based on robust data is also key – it allows us to stress test each portfolio so we can offer the highest level of support when our customers face major climate events.

Most importantly, black swan events are not something any one insurer can tackle alone. They need collective action and collaboration across the whole industry. By sharing insights, resources and best practices, we can reach better outcomes for our customers and communities. Together, we can build a more resilient future – one where we’re ready not only for the expected, but also for the unforeseen challenges climate change may bring.

Mark Burns, head of technical strategy at Intact Insurance

By their very nature, black swan events are unpredictable in complexion and occurrence. But if recent news is anything to go by, a major cyber event could be a likely contender to be the next black swan to hit the UK insurance industry.

Recent incidents underscore the scale of systemic exposure. The supply chain impact of the Jaguar Land Rover cyber attack this summer affected over 5,000 businesses for several weeks, with disrupted supply chains and an estimated cost to the UK economy of £1.9bn.

The AWS cloud outage was also very costly and affected several banking apps and HMRC platforms, highlighting the fragility of the financial services sector’s digital infrastructure.

The UK’s dependence on subsea cables, which carry over 95% of global internet traffic, adds another layer of risk. A targeted attack or failure could sever access to cloud services, authentication systems and trading platforms, paralysing operations across the country.

As the economy digitises, the severity of cyber risk escalates. According to the UK government’s Cyber security breaches survey 2025, 74% of large firms reported breaches in the past year, yet only a minority have robust cyber hygiene protocols in place.

Additionally, due to the wide range of potential causes for cyber events, this is an ever-moving target which heightens the need for good risk management and understanding, both for businesses and insurers.

For the insurance industry, this presents both a threat and an opportunity. The sector must move beyond traditional risk modelling. Cyber risk is dynamic and interconnected and could well test the resilience of the entire financial ecosystem. Preparedness therefore means investing in multi-cloud resilience, supply chain visibility and real-time threat intelligence.

Adam Lloyd, chief underwriting officer at Allianz UK

As insurers, our role in anticipating and preparing for ‘black swan’ events – those rare but high-impact scenarios that can reshape markets overnight – has never been more critical. The industry is evolving, expanding risk management frameworks and deepening scenario modelling across both climate and non-climate domains.

Actuarial risk is now central to assessing balance sheet resilience under extreme conditions.

At Allianz Commercial, we take a proactive stance. By harnessing global insights into emerging risks, we run regular ‘fire drills’ to test our readiness.

Cyber risk is a prime example – while its frequency is rising, our technical maturity and experience have reduced its specific impact on our business. We currently rate it as medium impact, with active monitoring in place.

This disciplined approach ensures we remain alert and prepared not just for the unlikely, but for the unexpected.

It’s helped us grow our customer base through a recent period of economic, social and political turbulence and reinforces our commitment to underwriting resilience in a rapidly changing world.

Dr Matthew Connell, director of policy and public affairs at the CII 

There was a time when huge, globally disruptive events seemed to have been consigned to history. Now, they compete to fill the top news spot every day.

The London insurance market is better placed than most institutions or networks to respond to uncertainty because of its concentration of expertise on every aspect of the global economy and its global operational reach.

One of the Chartered Insurance Institute’s New Generation groups looked at black swan risks earlier this year.

Its report, When Uncertainty Calls, found that when insurers deal with uncertainty well – as they did when they kept grain exports from Ukraine alive at the beginning of the war with Russia – they apply the three C –collaboration, creativity and certainty.

Looking forward, one particularly menacing black swan risk that the New Generation group considered was an unprecedented technology outage.

The cyber market has already seen elements of the three Cs. Insurers have worked with regulators to understand the prudential risks around silent cyber, which has, in turn, inspired creativity around new explicit coverage for ever larger cyber risks. This gives some degree of certainty to organisations that choose to take advantage of the market.

However, there is still much to do, with the IMF in 2024 quoting an estimate that cyber exposures amount to between 1% and 10% of the global economy.

To meet a challenge on this scale – perhaps an event that temporarily extinguishes access to cloud computing – insurers will need to draw on all their creativity and powers of collaboration to help maintain certainty.

Will Pritchett, insurance industry lead (UK, Ireland and Africa) at Accenture

While a catastrophic outage or compromise at a leading cloud provider remains unlikely, even a partial or short-lived disruption could expose vulnerabilities in the infrastructure supporting many of the world’s largest online services.

Although clients typically distribute workloads across multiple regions, the risk of simultaneous or cascading failures cannot be ruled out. As recent history has shown, even low-probability global events can have far-reaching consequences.

Such incidents would highlight our deep reliance on cloud computing in every aspect of daily life – from accessing essential banking, government and workplace systems to something as trivial as losing hard-earned points in the latest gaming craze.

They could also strain thousands of UK businesses and generate a surge of correlated claims, leaving insurers exposed to an accumulation of losses. This underscores the need for insurers to work proactively with policyholders to assess their cloud dependencies, encourage robust mitigation strategies and consider appropriate policy exclusions where resilience measures are lacking.

Unlike a hurricane that strikes one coast at a time, a major cloud failure would hit every industry everywhere, all at once. Even short-lived disruptions reveal just how dependent we have become on the fragile infrastructure that keeps the internet running.

Syndicates are well aware of this real and underappreciated systemic risk. The industry can model a hurricane – it still cannot model the collapse of the cloud.

However, underwriters can at least work proactively with the insured to consider and mitigate the risk and to price the risk more accurately, modelling outages using trading patterns, lost revenue projections and dependency data.