Issue 2 Q2 2025
FEATURING
Mind the AI adoption gap: Take care not to fall behind
Issue 1 Q1 2025
Introduction It is my pleasure to introduce the second edition of Risk Quarterly, a publication designed to provide insights on the ever-changing risk landscape and its implications for business. Risk Quarterly draws insights from our annual Corporate risk radar report, featuring perspectives from Clyde & Co lawyers globally on the key risk areas that are top priorities for C-suite executives, in-house legal teams, and claims departments. With 71% of businesses using genAI in at least one business function, this edition reframes the AI conversation by exploring a less discussed but critical perspective: the risks of not adopting AI, using it as a cornerstone of any future-proofed strategy. We also explore the transformation of HR through AI. Also in this issue, we look at the insurance risks of green technologies, the latest developments in cyber risk, the rise and cost of obesity drug use and the global impact of shifting tariffs. At Clyde & Co, we believe that nobody handles risk like we do, bringing to life the legal expertise we have managing emerging risk and handling new commercial complexities borne out of nearly a century operating at the heart of global commerce. We hope you find real value in this edition. If there are topics or themes you would like to see covered in future editions, please let us know at riskquarterly@clydeco.com.
Kevin Sutherland Member of the Risk Quarterly Editorial Board and Global Head of Aviation
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Carolena Gordon Global Senior Partner and Chair of global management board, Montreal
Global Directors’ and Officers’ survey report 2024/2025
Is buying land in Africa a high-stakes gamble?
Green technology Risks for 2025
Adjusting to major global market shifts as tariffs hit home
5 key steps employers should take when using AI in the workplace
The year in virtual assets 2024 recap, 2025 preview
Roundtable event Finding opportunity amidst the geopolitical risk landscape
Introduction Kevin Sutherland
Flight path: The ‘No Russia’ clause
Indigenous rights
Is the UK becoming a hellhole jurisdiction for insurers?
Emerging risks
Corporate risk radar
New horizons–Business risks to monitor (and mitigate) in 2025
Finding opportunity in risk
Geopolitical strategist Tina Fordham’s outlook for 2025
In this issue...
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By Isabel Simpson
Partner
Artificial intelligence (AI) is not new, yet to many people it is still an unknown quantity, and they have serious misgivings. As it starts to infiltrate everyday life, there’s fierce debate around the risks: from the potential for bias, inaccuracy or hallucinations, to job displacement, privacy, data protection, and IP risks. However, what’s often missed out in the discussion around AI is that not using it poses significant risks in itself. If organisations focus too heavily on the downsides of AI, they may overlook the important benefits it can deliver in terms of accelerating innovation cycles, generating business-critical insights, boosting productivity, enhancing efficiency gains and attracting talent. Failing to take the initiative could put them at a major competitive disadvantage and the longer they leave it, the harder it will be to close the gap with faster-moving rivals.
of respondents saying their organisations now use it in at least one business function, up from 33% IN 2023.
A global AI survey by McKinsey found that genAI usage jumped sharply last year, with
71%
For a long time, many businesses have been hesitant about AI, either due to the widely publicised negatives or simply because they had decided to ‘wait and see’. Now, we appear to be reaching a tipping point in AI adoption, especially with the advent of generative AI (genAI). A global AI survey by McKinsey found that genAI usage jumped sharply last year, with 71% of respondents saying their organisations now use it in at least one business function, up from 33% in 2023.1 No wonder the genAI market is forecast to “explode” in the next decade, reaching USD 1.3 trillion by 2032, according to Bloomberg Intelligence.2 If one company seizes the opportunities afforded by AI, and its competitor doesn’t, what was once a level playing field suddenly becomes very uneven, with the potential to make previously sound business models less viable. The risks of inaction are becoming increasingly severe. Organisations that delay AI education and adoption risk falling into a spiral of diminishing relevance. As peers and competitors integrate AI into their core processes, they will not only gain efficiencies but also make strategic decisions more quickly, launch products faster, and respond to market changes with greater agility. The compounding nature of these advantages can lead to a widening innovation gap that may be difficult—if not impossible—to bridge.
A force to be reckoned with
AI is often described as a “force multiplier”3 – meaning that early adopters can make progress faster and faster as AI augments their capabilities, leaving the rest falling further behind. This applies to every industry, not just ‘high-tech’ sectors. For example:
Strategic capability
Lack of AI adoption can weaken strategic foresight, as organisations forgo powerful predictive tools that can flag emerging risks, detect market shifts early, and inform long-term planning
Missing out on valuable insights provided by sophisticated AI-powered data analytics may lead to poor visibility and bad decision-making
Failing to keep up with the ever-quickening pace of innovation driven by AI could render existing products and services outdated or even obsolete very quickly
Delaying AI integration may limit an organisation’s ability to scale efficiently, especially in areas like customer service, supply chain management, or compliance, where AI can automate complex, high-volume processes. This can constrain growth and increase operational strain over time.
Not grasping the significant time and cost savings or productivity gains AI can deliver could erode profit margins or make a brand less competitive in terms of product prices and/or service delivery times compared to others in the market
Losing key staff to more forward-thinking companies who are adopting AI to work smarter (and failing to attract top talent to fill the gaps in turn) risks creating a vicious cycle of skills attrition and sustained under-performance
Operational efficiency
Talent and reputation
Being perceived as a digital laggard could damage brand reputation, especially among digitally savvy consumers, clients or investors who increasingly associate innovation with trustworthiness, agility and relevance
Missing AI-driven improvements in cybersecurity, such as real-time threat detection and response, could leave organisations more vulnerable to increasingly sophisticated attacks
Falling behind in AI adoption could result in regulatory non-compliance, as new laws and industry standards emerge that assume the use of AI for monitoring, reporting, or risk mitigation
Security and compliance
Organisations without AI capabilities may struggle to meet evolving legal expectations, risking fines, sanctions, or reputational harm
Fear of the technology itself is one major barrier to adoption – but others include: a lack of clarity around what AI can do, the types of AI and how they could be deployed, and how to put frameworks around its use. Learning more about it will make people feel more empowered and change perceptions. For instance, AI can seem more accessible if it is viewed as simply the next stage in the evolution of technology. As Jan Spittka, Clyde & Co Partner in Germany says, “It’s helpful to see AI, not as a radically novel concept or as a standalone tool to be used in isolation, but as the next step in a continuum of technological innovation which can be integrated into the tech stack to help tackle complex tasks or complete tasks faster. Viewing AI as an enabler – a means to solve problems, surface hidden insights or unlock potential – is another way to look at it.”
The next step in the tech innovation continuum
It’s helpful to see AI (...) as the next step in a continuum of technological innovation
Organisations would do well to take a strategic approach to AI to ensure they are using it wisely to minimise the risks and get the most out of it. That does not mean starting with a blank sheet of paper, though. On the basis that artificial intelligence should not be seen as unique and separate to other technologies, AI should form part of wider tech strategy and be incorporated into the broader digital transformation journey. There should be no need to create a new framework specifically for AI: the same principles around issues like ethics, alignment with business goals, thorough due diligence and oversight apply as with any other tech investment. What matters is to focus on: what is different about AI, what are the new risks to consider and what risks could be incurred by not bringing AI in and adjusting the approach accordingly.
AI is incredibly powerful when used in the right way – but what that looks like depends to a great extent on the organisation. It’s important to think about what specific issues AI could address in a business, to pinpoint where to derive most benefit. There may be hundreds of potential use cases to be narrowed down and prioritised. For example, AI could streamline processes, spot trends, answer questions or draft documents. Organisations need to understand how a particular use case is going to unlock value and demonstrate return on investment. “AI is not ‘one-size-fits-all’ – either in terms of use cases or when it comes to the risks,” Lamisse Bajunaid, Clyde & Co Partner in Saudi Arabia points out. “The key is to take a balanced - pragmatic, yet responsible – approach, based on your organisation’s needs. That will create a win-win situation: where you address the risks of AI head-on while reaping its rewards.”
Responsible, pragmatic deployment
Ensuring AI delivers accurate, meaningful outputs requires solid foundations to be put in place, in terms of centralised, clean, well-structured, up-to-date data; fit-for-purpose processes; and well thought-through governance, including ongoing monitoring and testing. Trying to move too fast to implement or scale up AI before these three fundamental elements have been established is likely to lead, at best, to achieving only limited success or at worst, to incorrect or misleading results, with potentially serious consequences. Education about what AI is, what it can do, how to use it, and its risks is also vital, from the top down, backed up by clear policies around usage and on-going training to keep up with developments in this rapidly evolving area. While AI specialists may be required on the IT and/or risk management teams, staff across departments at all levels should have a reasonable understanding of how the AI works, how to interpret its results, how it can empower them in their roles, when to use nuanced human judgement and how oversight is overlaid. Embedding AI literacy across the organisation will encourage people to engage with this technology, and ensure it is being properly used, with sound decision-making from leadership.
Doing something new is always fraught with pitfalls, but standing still in a fast-moving world inevitably means being overtaken. AI is simply the next step in the evolution of technology, and like it or not, it is here to stay and advancing all the time. Sooner or later, all business will have to embrace it, and those that choose to act sooner are likely to win an early advantage and future-proof their operations – provided they do so in a considered, responsible, well-organised way that effectively mitigates the risks.
Overtake or be overtaken
Click photos to find out more
Singla, A., Sukharevsky, A., Yee, L., Chui, M., & Hall, B. (2025, March 12). The state of AI: How organizations are rewiring to capture value. McKinsey. https://www.mckinsey.com/capabilities/quantumblack/our-insights/the-state-of-ai (2023, June 1). Generative AI to become a $1.3 trillion market by 2032, research finds. Bloomberg Intelligence. https://www.bloomberg.com/company/press/generative-ai-to-become-a-1-3-trillion-market-by-2032-research-finds/ Ringdahl, K. (2025, April 14). Generative AI is the greatest force multiplier in agile history. Forbes. https://www.forbes.com/councils/forbestechcouncil/2025/04/14/generative-ai-is-the-greatest-force-multiplier-in-agile-history/
Reference list
MEET THE AUTHORS
Jan Spittka Partner, Düsseldorf
Isabel Simpson Partner, London
Lamisse Bajunaid Partner, Jeddah
Contributors
MEET THE Authors
ach year we publish our Corporate risk radar report, which acts as a bellwether for
E
The evolving risk landscape through the lens of leading decision-makers
Senior leaders’ perception and management of risk
This research, conducted with Winmark, the C-suite intelligence and networking organisation, provides exclusive insights into which areas of risk are front of mind, delving into economic, regulatory, geopolitical, operational, market, technological, societal, climate, reputational and people-related risks. As it does so, it shines a spotlight on levels of preparedness and what strategies businesses are adopting to meet the challenges and capitalise on the opportunities that arise out of the current – and future – risk landscape.
Geopolitical risk was the fastest-growing “high impact” risk, with an 11% uptick (to 54%) in the proportion of respondents concerned about challenges including sanctions, trade barriers and supply chain disruption. Overall, economic risks topped the table of high-impact risks, with more than eight in ten respondents (82%) concerned about issues such as inflation, interest rates and currency volatility.
At times of uncertainty and instability, agility is vital to mitigate adversity and seize opportunities. Yet, knowing what actions to take and being adaptable is easier said than done. One in four business leaders said that the complex risk landscape was hampering bold decision-making, and less than half (48%) felt able to adapt their strategies to changing circumstances. Tactics such as improving future risk-spotting capabilities, prioritising operational resilience and creating dynamic internal structures must, therefore, come to the fore. Many multinational companies we work with are recalibrating their business models and adjusting their mindsets accordingly. Against this backdrop, GCs and legal teams have a critical part to play in anticipating risk and steering their organisations through complexity, acting as trusted strategic as well as legal advisers to the business. While core activities such as securing legal and regulatory compliance remained priorities, most GCs also recognised the need to carry out horizon scanning to pre-empt issues (81%) and proactively assess risk (74%) as part of their role.
The polycrisis concept has been borne out and amplified in 2025, marking the start of a period defined by heightened uncertainty and complex, interconnected challenges. In just the first few months of the year, the familiar contours of the international order have shifted dramatically, raising new questions about long-standing political alliances and trade relationships. Businesses across the world are now navigating these changes, reassessing their strategies and seeking clarity amid the turbulence. While there are undoubtedly difficult adjustments ahead, these shifts may also create new and unexpected opportunities. The potential for optimism in difficult times was explored at a recent roundtable event where strategic risk and geopolitical expert Hagai M. Segal and Clyde & Co Partners shared their insights on what it means to live in a polycrisis world and how to adapt.
2025: An escalation of polycrisis
sentiment among General Counsel, in-house legal teams, the C-suite and senior board members of companies worldwide about the key risks their organisations are facing and their impact.
Click here to download the report
2024: The emergence of “polycrisis”
Our report centres on the premise that in 2024, we entered an era of “polycrisis”, where a confluence of economic turbulence, geopolitical turmoil, regulatory complexity, talent shortages and the advent of AI (to name a few) were creating major upheaval for businesses. Amid this multitude of disruptive forces, a heightened sense of threat was revealed across almost all risk categories as the landscape in which businesses operate underwent rapid change.
Geopolitical risk was the fastest-growing “high impact” risk
Ben Knowles Partner and Chair of the Global Arbitration Group, London
Rebecca Kelly Partner, Brisbane
Eva-Maria Barbosa Partner, Munich
Geopolitics is a complication of normal business, not abnormal business. That’s really important for having the confidence to make medium and long-term decisions. Hagai M. Segal, Strategic risk and geopolitical expert
n Wednesday 5th February 2025, Clyde & Co hosted an exclusive roundtable dinner
O
MEET THE HOST
Chris Holme Partner, London
Roundtable event
Finding opportunity amidst the geopolitical risk landscape
The Corporate risk radar report found that geopolitical risk is the fastest-growing ‘high-impact risk’ in 2024, rising to priority number four from number eight two years ago, with top concerns including the threat of recession, raw material costs, and supply chain disruptions.
Hosted by Chris Holme, Partner at Clyde & Co and leading employment law specialist, the roundtable was attended by GCs and senior peers from diverse sectors. They were joined by a special guest, strategic risk and geopolitical expert Hagai M. Segal, who has worked with organisations at the forefront of risk management, including the FBI, the US Federal Reserve, the Metropolitan Police, and the British army.
Throughout the roundtable, Segal provided fascinating insights and anecdotes on strategic risk, spanning the threat of cyber-attacks, demographic changes, global power shifts, and events that could spark World War Three. Most importantly he reassured the audience there is reason to be optimistic and that opportunities can be found amid the risk, with the right approach.
Opening the discussion, Holme observed that there is more going on in the world now than at any time since the Cuban Missile Crisis, while “…the world is far smaller than it used to be… data instantaneously goes from one end of the world to the other.”
We’re living through a polycrisis
Segal agreed that, on one level, we’re living in “pretty traumatic times,” and a “polycrisis world”. Yet, there is still reason for optimism. While events in Syria, Gaza, Ukraine, and elsewhere are devastating for local regions, they are not leading to global conflict.
For this reason, Segal likened geopolitics to “…the background music we hear wherever we go.” The issue for business leaders is that too many are tuning out the hum, rather than using it to inform decision-making. So, if global events impact their operations, they find themselves on the back foot, focused on loss mitigation rather than strategic thinking, with significant reputational and financial repercussions.
Addressing how organisations can manage geopolitical risk more effectively, Segal stressed that it doesn’t have to involve wholesale change but “adapting classical principles of good governance, good organisational structure and good risk management to a new, adaptive and changing world.” Key steps include integrating the risk function with the wider organisation and using simple tools to develop literacy around risk.
“Organisations realise they’re vulnerable because they thought they owned it,” he explained. “But they created a risk function to tick boxes and then blame when things went wrong. That risk function didn’t talk to the rest of the enterprise.”
Adapting to a polycrisis world
Breaking out into small groups, Hagai asked delegates to discuss the geopolitical issues impacting their organisations. The discussion surfaced a wide range of experiences and perspectives:
Conflict drives regulatory change: Often it isn’t global conflict itself that disrupts business but how these events impact the regulatory environment. Overlooking this possibility can derail business planning and opportunities.
Experiences of risk
Finding opportunity in volatility: Many delegates agreed it is vital to lean into volatility and spot opportunities within the chaos. Encouragingly, some feel more confident doing this following their experiences managing Covid and Brexit disruption.
Risk is subjective: Several delegates commented on the challenge of navigating diverse attitudes towards geopolitical risks across leaders and global cultures, and how this can impact an organisation’s ability to capitalise.
Balancing politics and ethics: Many were concerned about geopolitical events and their global effects on issues such as ESG (environmental, social, governmental).
How can organisations respond more effectively and proactively to geopolitical risk? Segal stressed the role of simulation in testing organisational preparedness for different events. This approach starts a conversation about the nature of risk, and risk tolerances, and even helps surface new threats, by building a better understanding of processes, reporting channels, and employee experiences.
Starting a conversation about geopolitical risk
Organisations must also look beyond traditional risk models, which are failing to identify some of the biggest geopolitical concerns. Segal raised numerous trends and possible threats that should be on company agendas but often aren’t. For example, what happens if the EU collapses? How would such events impact global supply chains, workforces, and beyond? Working through these eventualities brings the whole organisation along in exploring solutions and scenario planning, improving company agility and risk management as a whole.
Having these conversations, being nimble, constantly adapting, checking our vulnerabilities, this is the best way to limit susceptibility to these kinds of issues Hagai M. Segal, Strategic risk and geopolitical expert
CEOs today are the face of geopolitical corporations, helping to shape the policy of public reality, societal, and geopolitical issues. Leaders must swerve negativity and position their organisations favourably alongside key geopolitical issues. For example, Segal advises leaders to identify ways to engage in corporate diplomacy, by offering aid or other support to affected governments, to help find solutions and build valuable relationships for the future.
But beyond that, Segal encourages business leaders and their wider organisations to become so comfortable with geopolitical risk that they can profit from it, having the confidence to go against conventional thinking to identify long-term revenue streams.
A new geopolitical corporation
To do this, they must tune into the “background music” of geopolitics, look beyond the “old systems that haven’t adapted to the polycrisis world,” and make geopolitics a part of everyday conversations. Geopolitical risk needs to come out of the boardroom and become part of the real world.
at The Wolseley City diving into geopolitical risk, one of the key themes to emerge from our 2024 Corporate risk radar report.
Analysing and planning for the unknown
MEET THE AUTHOR
Neil Beresford Partner, London
Latest insurance news and opinions to help you navigate the unknown
Emerging risk
hange is a constant in today’s world, and risks are continuously evolving. Emerging risks may be entirely new,
It is imperative for all types of business, but above all those involved in risk transfer, to keep abreast of emerging risks. The challenge of doing so should not be underestimated, as emerging risks are often poorly understood and always fast-moving. Their long-term impact may be difficult to predict. In this short introduction, we outline the nature of emerging risks and their primary drivers. We also consider their impact on insurers and policyholders, and the important role that effective risk monitoring can play in formulating an appropriate approach.
such as artificial intelligence, or they may be a variation of existing risks, such as mass tort litigation in the United States which has the potential to spread elsewhere. Some risks – such as technological disruption, climate change or geopolitical volatility – are systemic and require especially careful analysis.
An excellent definition of emerging risks is provided by Hannover Re: "Emerging risks are new or future risks whose hazard potential is not yet reliably known and whose implications are difficult to assess. These risks may evolve over time from weak signals to clear tendencies with a high potential for danger". Examples include the rise of artificial intelligence (AI), the widespread distribution of weight loss drugs, supply chain disruption or water scarcity. They may have immediate impact and escalate rapidly, or develop slowly over several years, but they all have the potential to adversely affect people in all parts of the world, irrespective of the level of economic development. If defendants have deep pockets, the potential for future litigation is especially real.
What are emerging risks?
There are four main drivers of emerging risks, often overlapping:
1
Geopolitical – such as political instability, conflict, or international migration
2
Scientific and technological – such as novel diseases or new tech capabilities
3
Environmental – such as climate change or biodiversity loss
4
Legal and regulatory – such as regulatory regimes, legal doctrines, or litigation trends.
Many emerging risks are fuelled by multiple drivers and the profile of an emerging risk often depends on geography. For instance, stakeholders in Europe tend to be focussed on the causes of climate change, while those in Latin America are more concerned about its effects. The risks of weight loss drugs are a growing issue in first-world countries; the protection of indigenous rights is of significant concern in the global south. In some cases, multinational companies may face conflicting pressures across different locations – such as divergent environmental, social and governance (ESG) requirements in Europe compared with the US.
What strategies can be deployed to tackle them?
The emerging nature of these risks means there is usually little – if any – data upon which to base decisions, and the direction of travel is unclear. Yet, it is vital that organisations take steps to assess the degree of threat and factor in the unexpected. From an insurance perspective, they should ensure that risks are properly catered for in policy wordings and priced adequately into premiums. Organisations should:
Be realistic and specific. Some risks, such as geopolitical risk, are too big to address in the round. They are better treated as drivers of specific risks, and a more helpful way to approach them is to focus on particular sub-categories with measurable business implications – such as an analysis of currency volatility or supply chain weakness.
Keep an open mind. Since this is uncharted territory, there is no right or wrong way to deal with emerging risks. Sometimes a broad scenario-based analysis is more effective than an exhaustive review of the detail.
Refer to comparable risks. Access the best possible data, but if none is available, assess the risk in relation to other, comparable risks which are better understood. For example, how could precedents set in previous pharmaceutical cases have a bearing on allegations over side-effects caused by weight loss drugs?
Stay up-to-date and consider geographical trends. Keep abreast of the news and legal, regulatory, cultural, economic and political developments in relevant jurisdictions to help navigate fast-changing or potentially diametrically opposing environments.
Look at liability pathways. Consider in what ways an issue might result in litigation, such as: who might the plaintiffs be, what is the law, what is the level of damage, and is there provable liability? The largest risks are often the least susceptible to litigation because their ubiquity prevents any one person or class of persons from being held liable.
Utilise risk monitoring, mapping or modelling tools where available, and seek to understand the likely risk exposure and development timeline (i.e. short, medium or long-term) as it applies to the business.
Liability pathways are scenario analysis tools which help organisations evaluate what harms could cause liability, what form liability might take, the likely degree of claims activity and severity and which types of cover might be affected. This is a pragmatic approach to dealing with large and potentially systemic risks, to assess whether (and how) they could translate into tangible liability.
What are liability pathways and why are they so important?
For example, it may be difficult for claimants to successfully argue that a plastics manufacturer has caused damage to the ocean via waste pollution. There are too many sources of plastic and, once in the ocean, the originating manufacturer is usually impossible to identify. However, an allegation that factory workers have been harmed by exposure to chemicals, or that greenwashing has taken place, is likely to have a much greater chance of success. Scientific studies should similarly be treated with care. Rarely will a litigated claim be based upon a single finding made in a single study suggesting that there could be a statistical correlation between a certain substance or activity and a certain type of disease will rarely be sufficient to sustain a litigated claim. In most jurisdictions, a significant body of evidence will be required in order to persuade a court that a causal link exists. This is a process that encourages a strong focus on the science and the law, to analyse whether the scientific evidence is strong enough and whether the legal environment would support a claim. Then, better-informed decisions can be made about the size of the risk and the best strategy to adopt.
Emerging risks do not follow linear trajectories: they may emerge from nowhere (e.g. Covid-19) or fall off the risk register because they turn out not to be as serious as first thought (e.g. the metaverse). That is why we maintain and monitor a register of around 30 emerging risks which we believe are the most critical facing businesses and insurers today. This risk register informs our programme of events to raise awareness of – and guidance around - the issues, and it is shaped by our legal and commercial experience in the field across multiple geographies. When it comes to the potential for litigation, understanding the focus of activists and non-governmental organisations (NGOs) is often critical to stay ahead of the curve. We are also working with partners to develop modelling techniques to quantify and forecast risk exposure, to help organisations have more visibility over emerging risks and underwriters and to give actuarial departments a clearer perspective on the allegations that could be made. In this way, we can help position clients to anticipate developments before they occur, and adjust policy wordings to reflect risk appetite.
Monitoring and modelling emerging risks
Each of these risks carries a unique set of challenges, but they all share a common thread: the potential to reshape industries, regulations, and risk landscapes in ways that are difficult to predict—and impossible to ignore. From shifting supply chain dynamics and the rise of AI, to environmental pressures like water scarcity and the impact of evolving battery technologies, organisations face a landscape in flux. In our next piece, we explore one of the fastest-moving developments in this space: the surge in use of semaglutide weight loss drugs. As demand accelerates and regulatory scrutiny intensifies, where might liability risks emerge?
What emerging risks are high on the radar?
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For Richard Manstoff, Senior Associate at Clyde & Co, one of the most serious issues is the perception that the drugs may be perceived as cosmetic treatments rather than medicines having powerful effects on insulin and glucose levels. They can be dangerous if misused or prescribed inappropriately or without appropriate care or safeguards. Moreover, the potential adverse side effects of these drugs in the wider population are not yet fully known.
Prescribers are required to have an adequate knowledge of the person’s health and their relevant medical history,” he said. “Serious risks may arise if weight loss medicines are prescribed privately, without access to full medical records, without full knowledge of a patient’s other medical conditions or the other medications that they may be taking at that time.”
Taking semaglutides may require an adjustment of other medications, both at the outset and as the patient’s weight falls. To mitigate risk, the clinician prescribing a weight loss drug should coordinate carefully with the patient’s regular doctor.
Drug manufacturers may not be the only target of claims. The breadth and depth of the semaglutide supply chain make it important to evaluate the liabilities of all those involved.
Beyond bodily injury claims
Claims activity may in due course arise against healthcare professionals, weight loss clinics and medical spas, which include weight loss among other aesthetic medical treatments. Pharmaceutical companies have begun filing lawsuits against “compounding pharmacies” and others that produce and sell off-brand or custom-made medications, alleging trademark violations and false advertising if they reference established brand names in their product literature. Offshore litigation is also a possibility.
The rise of obesity drugs
Lawsuits alleging bodily harm due to side effects are already in the very early stages in the US, and the type and extent of the claimants’ alleged injuries, as well as the number of patients asserting claims, may grow exponentially over the coming years. Multidistrict Litigation (MDL) is now underway, focusing primarily on gastrointestinal injuries. As new claimants are added to the MDL, plaintiffs have sought to expand the scope of injuries alleged.
The extent to which manufacturers knew (or should have known) about side effects – and whether they provided adequate warnings – are always critical considerations in the context of pharmaceutical liability claims. Marketing tactics are scrutinised to establish whether they were overzealous, misleading, or downplayed the risks. Plaintiffs may use “foreseeable (mis)use” arguments to allege that manufacturers should have warned about potential harm from “off-label use” in a way that was arguably predictable – in this case, that may include the use of a diabetic drug to treat obesity.
As these claims develop, it will be interesting to see if liability will be allocated differently between defendants given the intended use of the drug,” said Rosehana Amin, Partner. “It also gives rise to the question of whether a manufacturer can be held responsible for side effects when a drug is used for a different purpose, or if such side effects can be argued to be foreseeable regardless of the use of the drug, i.e. for diabetes or weight loss.”
Evaluating the overall exposure to these claims poses a significant challenge for insurers. At this stage, it is very difficult to predict which injuries will eventually be included within the scope of litigation, whether legal liability might exist, and the potential magnitude of damages claims.
To learn more about this issue, watch our webinar here
Kirsten Soto, Senior Associate, warned insurers, “These plaintiff firms are sophisticated litigators. They will plead extremely broadly to try to trigger as much insurance coverage as possible. These claims should be approached with care and reviewed in consultation with coverage counsel. Even if the eventual loss may be uninsured, there may still be a duty to defend, depending on the jurisdiction.”
The health implications of semaglutides
Semaglutides are big business: worldwide spend on these drugs is forecast to exceed USD 130 billion within the next five years in the US alone2. They are now widely available from GPs and family doctors, nurse prescribers, private clinicians and online pharmacies, and can be taken in tablet or injectable form to suppress appetite and/or alter energy consumption. Like many drugs, they can be prescribed ‘off license’ or ‘off label’ (i.e. for applications other than those for which they are licensed), at the discretion of a qualified prescriber.
(2021, June). Obesity. World Health Organization. https://www.who.int/news-room/facts-in-pictures/detail/6-facts-on-obesity (2025, March). Skinny jab scandal: Dispatches. Channel 4. https://www.channel4.com/programmes/skinny-jab-scandal-dispatches
With semaglutides becoming increasingly accessible and widely used, lawsuits alleging adverse effects are highly likely to proliferate. If an insurer is concerned about the potential exposure, now is the time to take stock of the appetite for risk.
s millions turn to drugs to help them lose weight, lawsuits are already underway concerning the side effects. The first of Clyde & Co’s 2025 Emerging risk webinar series explored where liability could lie if things go wrong and what forms it might take.
Obesity is now a global epidemic, according to the World Health Organization, claiming the lives of around 2.8 million people each year1. Given the challenges of tackling the problem through exercise and diet alone, the use of drugs to help people lose weight is growing, and some brands – such as Ozempic and Wegovy - have become household names.
A
Known as ‘semaglutides’ (and their cousins ‘tirzepatides’ such as ‘Mounjaro’), these insulin-like medications were originally developed to treat diabetes. While they can be extremely effective, the concept of using these drugs for weight management is still very new; not all are licensed for this purpose, and they should be prescribed with care. From an insurance perspective, this raises important liability challenges and coverage issues.
Weight loss at what cost?
The expanding scope of liabilities
Richard Manstoff Senior Associate, London
Kirsten Soto Senior Associate, Los Angeles
Rosehana Amin Partner, London
Serious risks may arise if weight loss medicines are prescribed privately, without access to full medical records (...)
MEET THE Host
Helen Bourne Partner, London
Substantive legislative reform is taking place, in the form of the EU’s new Digital Operational Resilience Act (DORA), the second iteration of the Network and Information Systems Directive (NIS2) and the Cyber Resilience Act, as well as the UK’s Property Digital Assets Bill and the Data Use and Access Bill. While organisations may have valid reasons to be concerned about the increased scope, costs and complexity of compliance requirements, the focus here is on building resilience. By being less exposed to cyber risk, the benefits should outweigh the investment required. Legislative reform can be positive in other ways too – for example, by harmonising or aligning rules to make them easier to navigate across borders (as is the case with DORA).
yber threats are one of the fastest-evolving risks companies face, so staying ahead of regulatory compliance and being prepared for whatever malicious actors may have in store next is vital and challenging in equal measure.
Cyber risk rundown
The direction of travel in cyber litigation. The UK Courts continue to dismiss claims which fail to show that damage has been caused by data breaches (e.g. Farley vs. Paymaster) and the misuse of private information (e.g. Prismall vs. Google). However, another major collective action claim alleging unfair practices and misuse of data (Gormsen vs. Meta) has been granted leave to proceed and will be closely watched.
More coordinated regulatory and enforcement activity – 2024 saw regulators issue several large fines, as well as some successful appeals against penalties imposed. Overall, global watchdogs are increasingly collaborating on investigations into data protection and data transfer compliance, while law enforcement agencies around the world are acting together to disrupt the activities of criminals engaged in ransomware attacks.
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The full episode exploring this case can be found in Virtually everything – Episode 3: Cryptocurrency in the Courts, released in April 2024.
What to know now and watch out for ahead
The first episode gives an overview of the current legislative landscape, recent regulatory activity and court decisions made in 2024, as well as looking ahead to what organisations should be watching out for in 2025. Key issues covered included:
The impact of increasingly sophisticated threats, e.g. AI and deep fakes – As well as navigating the implications of these developments, organisations will have to grapple with a range of other dangerous emerging threats, such as the increasing sophistication of artificial intelligence (AI) and deep fake technology to undermine data security and privacy.
Being cyber ready is essential - and what this means in practice was the subject of discussion during the second podcast of the series. With cyber threats high on the boardroom agenda, organisations can benefit significantly from undergoing ‘cyber simulation’ or ‘tabletop’ training exercises to ramp up cyber resilience, prepare people to deal with incidents effectively, and mitigate risk.
This involves creating a theoretical cyber incident scenario to test and hone incident response processes and general preparedness, increasing key personnel’s understanding of the challenges they could face, how they should respond, and the roles and responsibilities of different individuals involved. Crucially, it gives staff a chance to increase their awareness of threats and the tools at their disposal to combat them in ‘peace time’, rather than as an attack is being waged. As well as increasing the confidence and competence of team members, ultimately organisations should then be able to benefit from an improvement plan, setting out measures to step up their readiness and response strategies.
Maximising cyber readiness
To find out more, tune into our podcast series.
Listen Episode 2
Our podcast series is designed to enhance organisations’ visibility over key developments, upcoming issues and emerging threats, providing critical insights and analysis to help mitigate risk and improve preparedness, should a data breach or cyber attack occur.
MEET THE Hosts
Lucy Nash Legal Director, Dubai
Vyasna Mahadevey Associate, Dubai
A significant focus of the series was the landmark DIFC Courts case, Gate Mena DMCC and Huobi Mena FZE v Tabarak Investment Capital Limited and Christian Thurner. This case broke new ground, particularly in recognising Bitcoin as property under DIFC law, allowing for legal actions such as bailment and property damage claims. The podcast delves into the implications of this decision, particularly its impact on tracing cryptocurrency transactions and quantifying losses during price fluctuations. Discussions with tracing industry leader Scott Pounder shed light on how blockchain analysis tools and multi-tool verification are being used to track assets across jurisdictions.
The hosts highlight the global perspective brought to the series through interviews with colleagues from jurisdictions including Singapore, Hong Kong, Australia, Germany, the UK, and South Africa. These comparative analyses revealed regional differences in regulatory approaches, from licensing categories to enforcement priorities. External industry leaders such as Andrew Spink KC, Justina Stewart, and Rebecca Keating provided valuable insights into groundbreaking legal frameworks like the DIFC Digital Assets Law and the EU AI Act, emphasising their implications for businesses operating in the virtual and AI sectors.
In the concluding episode of Series 2 of the Virtually everything podcast, hosts Lucy and Vyasna take listeners on a comprehensive journey through the key developments of 2024 in the virtual assets sector. They also share insights into what lies ahead in 2025.
The year in virtual assets
The episode revisits highlights from the year, beginning with the UAE’s regulatory advancements. With five financial services regulators, including the world’s first standalone virtual assets regulator, the Virtual Assets Regulatory Authority (VARA), the UAE has established itself as a global hub for virtual assets. The granting of 11 new Virtual Asset Service Provider (VASP) licenses in 2024 underscores this progress, attracting platforms worldwide to benefit from the region’s robust regulatory framework.
As 2024 came to a close, the hosts summarised the year as one of significant growth, regulatory evolution, and technological innovation for the virtual assets sector. Key trends included Bitcoin reaching new milestones, increased institutional adoption of cryptocurrencies, and the integration of blockchain technology with traditional finance. However, challenges such as market volatility and regulatory uncertainty remain.
Looking ahead to 2025, Lucy and Vyasna anticipate further developments in decentralised finance (DeFi), the recovery of the NFT market, and the expanding role of stablecoins in global commerce. Technological innovations, such as Layer-2 solutions, and a growing focus on integrating blockchain with traditional financial instruments, are expected to shape the sector. The need for enhanced anti-money laundering measures and greater regulatory alignment worldwide will also be pivotal themes.
Stay tuned for the next series of Virtually everything as the journey into the virtual world continues.
This podcast forms part of the Virtually everything podcast series. To find out more about the topics discussed in the series, please visit our dedicated Digital Assets and Blockchain page.
2024 recap, 2025 preview
5 key steps
(2024, March). Responsible AI in recruitment. GOV.UK. https://assets.publishing.service.gov.uk/media/65fda1b9f1d3a0001132ae5b/Responsible_AI_in_Recruitment.pdf (2024, January 18). Generative AI framework for HMG. GOV.UK. https://www.gov.uk/government/publications/generative-ai-framework-for-hmg Artificial intelligence: UK GDPR guidance and resources. Information Commissioner's Office. https://ico.org.uk/for-organisations/uk-gdpr-guidance-and-resources/artificial-intelligence/ (2023, March 15). Guidance on AI and data protection. Information Commissioner's Office. https://ico.org.uk/for-organisations/uk-gdpr-guidance-and-resources/artificial-intelligence/guidance-on-ai-and-data-protection/ (2024, November). AI in recruitment outcomes report. Information Commissioner's Office. https://ico.org.uk/media/about-the-ico/documents/4031620/ai-in-recruitment-outcomes-report.pdf (2024, November 6). Thinking of using AI to assist recruitment? Our key data protection considerations. Information Commissioner's Office. https://ico.org.uk/about-the-ico/media-centre/news-and-blogs/2024/11/thinking-of-using-ai-to-assist-recruitment-our-key-data-protection-considerations/ [Link not publicly accessible; appears to be internal SharePoint document.] https://www.google.com/url?q=https://clydeandco.sharepoint.com/sites/ClydeCoGlobalMarketing/Shared%2520Documents/General/Marketing%2520Campaigns/Global%2520campaigns/FY%25202025.26/RQ%2520Issue%25202/RQ%2520-%2520Content%2520temp%2520-%2520do%2520not%2520use.docx%23_msocom_1&sa=D&source=docs&ust=1744119286932877&usg=AOvVaw3gSFav4k9crXMt7oCvw-OH (2025, January 13). AI opportunities action plan. GOV.UK. https://www.gov.uk/government/publications/ai-opportunities-action-plan/ai-opportunities-action-plan (2025, January 20). The AI opportunities action plan. Clyde & Co. https://www.clydeco.com/en/insights/2025/01/the-ai-opportunities-action-plan Regulatory framework for AI. European Commission. https://digital-strategy.ec.europa.eu/en/policies/regulatory-framework-ai (2024, December 19). Artificial intelligence in the employment and recruitment sector (UK/EU). Clyde & Co. https://www.clydeco.com/en/insights/2024/12/artificial-intelligence-in-the-employment-and-recr?utm_source=vuture&utm_medium=email&utm_campaign=https%3a%2f%2fsites-clydeco.vuturevx.com%2fv%2f55477xxq20%20december%202024ai%20in%20the%20employment%20and%20recruitment%20sectorukeu%20-%20ukl%20-%20ins%20-%20241218%20-%20ai%20in%20the%20employment%20and%20recruitment%20sector (2025, January 20). The AI opportunities action plan. Clyde & Co. https://www.clydeco.com/en/insights/2025/01/the-ai-opportunities-action-plan
employers should take when using AI in the workplace
This means it is important that employers using AI take steps to carefully manage and mitigate the risks. This article sets out five key steps you can take to protect your business.
Artificial Intelligence (AI) offers significant benefits for employers. However, it brings with it risks that need careful management. We set out five key steps for employers to take to help manage those risks.
However, it is important that businesses understand that AI tools can expose them to risks, for example, the risk of making discriminatory or biased decisions and data privacy and security risks.
AI technology is widely used by employers to help with the recruitment and management of employees, helping them make decisions more quickly and efficiently.
The first step to manage the risks of using AI is to ensure you have a clear understanding of what those risks and challenges might be. Perhaps the biggest risk in the employment sphere is the risk of biased decision-making. There are inherent risks when utilising AI tools to make or assist in making employment decisions that the output will contain hidden biases. This is for three key reasons:
These factors could lead to discriminatory or unfair outcomes, such as biased recruitment decisions or the unequal treatment of employees, or the perception of unfair outcomes (which can be equally damaging). In turn, that could lead to employment claims, most commonly under the Equality Act, but also claims for unfair dismissal, breach of contract and data protection breaches.
The use of AI technology can also lead to risks to an employer’s confidential information. AI tools rely on data that each individual user inputs. If an employee uses AI in their work, they may be disclosing confidential company information. The AI tool may store that information and use it to respond to future user requests, creating a risk of inadvertently revealing the confidential information to those other users.
AI tools are built and ‘trained’ by humans, which means they can be subject to our conscious and subconscious biases. For example, if a person programming the AI software uses an inadvertently discriminatory criteria for job application screening technology, then the AI software will apply that same criteria.
They are designed to ‘learn’ from past outcomes and historical data. This is known as ‘machine learning’ and means the technology can amplify any existing prejudices. For example, if people from a certain university have historically worked at a company, the AI software may learn to favour employees from that university in an employee screening process.
AI does not have the autonomy to look beyond the data, rules or information it has been given. This means that, unlike humans, it cannot mitigate against its own biases or learnt discriminatory behaviour. Also, whilst we can train machines, we cannot give them a human level of context to inform decision-making. This can lead to concerns about the way decisions have been taken and the lack of ‘compassion’ which can be particularly damaging in the employment context.
Know the risk
Step one
The next step to managing the risks of AI is to ensure you have a full understanding of where and how you are using AI technology in your HR processes and can explain how decisions using AI have been made.
Carry out a risk assessment or audit of your AI systems and liaise with your AI providers to ensure you have a clear understanding of how the AI tools you use work and arrive at their outcomes. You may wish to do this under legal privilege. You may also want to ensure your contracts with the AI software providers contain appropriate provisions around the sharing of information in the event of a challenge and, if you can negotiate them, indemnities in the event their software is found to have hidden biases.
It is likely that risk assessments of this nature will be required by any future regulation around the use of AI, so as well as protecting the business now it should assist with future compliance obligations.
If an AI tool is providing information or making decisions, make sure you have a clear understanding of what information the technology considers and can explain how the tool arrives at its outcomes. If the software developer is not able or willing to explain this process to you, then it is not a product you should be utilising in your business. There will come a time when you are asked to explain a particular decision and how it has been reached, and if you are not able to explain how AI has made or contributed to the decision to a job applicant or employee – or indeed an Employment Tribunal if the employee brings a claim – then your business could be at risk.
Where issues of fairness and reasonableness are concerned, there is the risk that a Judge will be sceptical of the technology and make an adverse finding if an employer cannot explain how the technology works.
For example, it would be difficult to defend a claim that a redundancy was due to a person’s age if you used AI to select an employee for redundancy and did not understand how the AI software decided that the employee in question was the appropriate employee to select for redundancy.
Understand your AI
Step two
Regularly update your AI systems and use anti-bias software - There are tools that you can use to mitigate against the risk of possible inherent biases associated with AI software. For example, there is software that can make AI ‘blind’ to data related to gender, religion or race. As technology evolves and develops, more updates may become available which reduce the risk of bias and improve the accuracy and effectiveness of AI tools.
The next step is to put in place safeguards around the use of AI to help protect your business and ensure AI is used responsibly. Here are some suggested steps to take:
Maintain human oversight - Having a human involved in decisions is key. Decision-making should not be entirely automatic, so ensure any decision-making is subject to human involvement and oversight. Make sure you build in opportunities for feedback, explanations, and someone for people to raise any concerns with.
Train your employees - Train your employees who use AI, such as those in HR, on the risks involved in the use of AI technology, and how those risks should be managed.
Consider having an AI committee - Consider setting up an AI committee to take ownership and responsibility for how AI is used in the workplace, put in place policies and safeguarding measures and monitor compliance.
Develop an AI policy - Put in place an AI policy on the use of AI in the workplace. The policy should explain what is and is not a permitted use of AI, the safeguards and processes to follow, who to report issues and concerns to and the implications of non-compliance.
Take steps to manage the risks
Step three
The UK Government has published guidelines on Responsible AI in recruitment1, recommending steps that businesses should take in the recruitment and hiring process. Make sure you review this guidance if you are using AI tools for this purpose.
Look for opportunities in your industry to share best practices and insights about responsible AI use and follow any industry standards and guidelines.
In January 2024, the UK Government published generative AI guidance2 for the civil service, which may also be useful for other employers to read.
The Information Commissioner’s Office has also produced guidance and toolkits3 to help employers ensure data is kept secure and used appropriately when using AI. There is helpful guidance and information in their Guidance on AI and data protection4, the AI in recruitment outcomes report5 and key questions when procuring an AI tool for recruitment6.
There are a number of industry guidelines publicly available that can assist businesses with ensuring they are adopting responsible AI practices. For example, both Google and Microsoft have published their own guidelines and principles on this topic.
Follow industry and regulatory guidelines
Step four
Regularly audit and monitor your AI tools - Carry out regular audits of your AI systems so that there is a proper understanding of how they work and what information is considered when decisions are made. Also, consider how your AI tools ensure that personal data and business confidential information is kept secure.
Currently, there are no specific UK laws regulating how businesses can use AI. However, it is likely that there is going to be some UK regulation on AI in the future. Some existing legislation does already indirectly impact how AI is used, for example, discrimination and data protection laws.7
The Digital Information and Smart Data Bill has also been announced, alongside reforms to data-related laws aimed at supporting the safe development and deployment of new technologies which may include AI.
In the EU, the EU AI Act10 will apply to developers, deployers and users who operate in, or from, an EU market.
Up until now, the UK government has adopted a ‘pro-innovation’ approach to AI regulation. In the King’s Speech in July 2024, the Labour government set out its plans to establish “appropriate legislation to place requirements on those working to develop the most powerful artificial intelligence models”.
This ties in with Labour’s manifesto pledge to “ensure the safe development and use of AI models by introducing binding regulation on the handful of companies developing the most powerful AI models”.
5
Watch this (regulatory) space
Step five
The government has now published its AI Opportunities Action Plan8, which looks to further the ‘pro-innovation’ approach, but says little about how that will be regulated and what safeguards will be put in place. You can read more about the AI Opportunities Action Plan and the government’s approach to AI in our article The AI Opportunities Action Plan9, released in January 2025.
If you are interested in this topic and want to know more, you can read our update on Artificial Intelligence in the employment and recruitment sector,11 which looks at data protection issues and our update on the AI Opportunities Action Plan12.
James Major Partner, London
Graham Mitchell Paralegal, Glasgow
Sophie Jackson Knowledge Lawyer, London
(2024, March). Responsible AI in recruitment. GOV.UK. https://assets.publishing.service.gov.uk/media/65fda1b9f1d3a0001132ae5b/Responsible_AI_in_Recruitment.pdf (2024, January 18). Generative AI framework for HMG. GOV.UK. https://www.gov.uk/government/publications/generative-ai-framework-for-hmg Artificial intelligence: UK GDPR guidance and resources. Information Commissioner's Office. https://ico.org.uk/for-organisations/uk-gdpr-guidance-and-resources/artificial-intelligence/ (2023, March 15). Guidance on AI and data protection. Information Commissioner's Office. https://ico.org.uk/for-organisations/uk-gdpr-guidance-and-resources/artificial-intelligence/guidance-on-ai-and-data-protection/ (2024, November). AI in recruitment outcomes report. Information Commissioner's Office. https://ico.org.uk/media/about-the-ico/documents/4031620/ai-in-recruitment-outcomes-report.pdf (2024, November 6). Thinking of using AI to assist recruitment? Our key data protection considerations. Information Commissioner's Office. https://ico.org.uk/about-the-ico/media-centre/news-and-blogs/2024/11/thinking-of-using-ai-to-assist-recruitment-our-key-data-protection-considerations/ https://www.google.com/url?q=https://clydeandco.sharepoint.com/sites/ClydeCoGlobalMarketing/Shared%2520Documents/General/Marketing%2520Campaigns/Global%2520campaigns/FY%25202025.26/RQ%2520Issue%25202/RQ%2520-%2520Content%2520temp%2520-%2520do%2520not%2520use.docx%23_msocom_1&sa=D&source=docs&ust=1744119286932877&usg=AOvVaw3gSFav4k9crXMt7oCvw-OH (2025, January 13). AI opportunities action plan. GOV.UK. https://www.gov.uk/government/publications/ai-opportunities-action-plan/ai-opportunities-action-plan (2025, January 20). The AI opportunities action plan. Clyde & Co. https://www.clydeco.com/en/insights/2025/01/the-ai-opportunities-action-plan Regulatory framework for AI. European Commission. https://digital-strategy.ec.europa.eu/en/policies/regulatory-framework-ai (2024, December 19). Artificial intelligence in the employment and recruitment sector (UK/EU). Clyde & Co. https://www.clydeco.com/en/insights/2024/12/artificial-intelligence-in-the-employment-and-recr?utm_source=vuture&utm_medium=email&utm_campaign=https%3a%2f%2fsites-clydeco.vuturevx.com%2fv%2f55477xxq20%20december%202024ai%20in%20the%20employment%20and%20recruitment%20sectorukeu%20-%20ukl%20-%20ins%20-%20241218%20-%20ai%20in%20the%20employment%20and%20recruitment%20sector (2025, January 20). The AI opportunities action plan. Clyde & Co. https://www.clydeco.com/en/insights/2025/01/the-ai-opportunities-action-plan
Currently, globalisation and international trade trade—on which the world economy has come to rely—are undergoing significant change as the US government takes action to recalibrate how it views the balance of global trade. Many companies which rely upon global supply chains or that operate in international markets are grappling with changes that could affect the cost of doing business.
With tariffs imposed against almost every country on “liberation” day - April 2, followed closely by the announcement of a 90-day pause on higher tariffs for most, signs indicate we are only in the early stages of a period of significant uncertainty. With Canada and China among the first to respond in kind, the potential for reciprocal tariffs and trade tensions remains high. Some of America’s most important trading partners (including many Asian economies such as Vietnam, China and Taiwan1) were hit with the highest tariffs, and the range of potentially affected goods is wide – everything from cars to computer chips to toys to nuts and bolts. The impact is being felt across the world and should other countries take retaliatory action, the impact will only reverberate further. Even for those nations facing comparatively low tariffs such as the UK, the stakes are high and the indirect impact of tariffs will likely affect all economies to some degree. Of course, tariffs as a trading instrument are nothing new – the practice dating back to Ancient Greece2. Indeed, specific and restricted tariffs on particular goods/commodities are commonplace around the world and, together with free trade agreements, have helped to create competitive global markets.
Celest Koh Trainee Solicitor, Singapore
William Page Special Counsel, Sydney/Melbourne
Hannah Chua Legal Director, Singapore
Leon Alexander Partner, Singapore
Davies, R., McEvoy, F., & Hellings, J. (2025, April). Liberation day. Economics Observatory. https://www.economicsobservatory.com/liberation-day Beck, M. (2025, April). Trump and US tariffs: What might the impact be on the UK? House of Lords Library. https://lordslibrary.parliament.uk/us-tariffs-background-perspectives-and-impact-on-the-uk/
Celest holds an LL.B from the National University of Singapore and a Diploma in Maritime Business (with Merit). Driven by a strong interest in international trade and shipping, she supports the EMNR team across a wide range of matters, spanning both contentious and non-contentious issues in the trade and maritime sectors.
What’s different this time around is the speed and scale at which they have been imposed, and the implications for the entire global economy. Businesses have very little time to adjust to these seismic shifts – not least since it is still unclear whether any tariff pause or hike will be permanent, or how different governments or trading blocs might ultimately respond. Preparedness and agility are vital – but they are hard to achieve amid so many unknowns. Moreover, for businesses that may need to move into new markets or reorganise complex supply chains, the clock is ticking. Nonetheless, it is those that are cognisant of the risks and able to adapt the quickest that have the best chance of surviving and thriving through this tumultuous period. Monitoring the frequent, widespread changes on an ongoing basis, anticipating the most likely next developments, analysing the size and nature of the risks they could face, and prioritising what mitigation measures to take should all be part of companies’ playbooks. These must be updated regularly.
The first step in being prepared is ensuring businesses are up to speed when new tariffs are announced. With this in mind, our Tariff Tracker provides a vital primer. It outlines which countries and products have been impacted (with helpful links to relevant information sources) and can provide alerts sent straight to your inbox whenever an important update is made. The Tariff Tracker also links a series of articles with different jurisdictional perspectives.
Robbie Pilcher Associate, Sydney
Celeste Koh Trainee Solicitor, Singapore
The inevitable rush to implement new technology has therefore not been without risk, not least of damage to property. Periodic review of the key concerns is vital. The following takes a fresh look at some of those concerns.
Since records began in 2008, more than 1.5 million certified1 small-scale solar photovoltaic, or PV, systems have been installed across the UK.
This is welcome news, but an increasing desire for domestic installation has been further driven in response to an increase in the cost of living. This has not always meant that installations are safe. As with any technology which produces electricity, solar panels can cause fires. In July 2024, the London Fire Brigade reported that there had been 31 fires across the UK capital alone since 20182.
Planning and design issues add to the risk of solar panel fires, causing damage, not just to the PV installation, but the buildings on which they are mounted. PV systems are known to have been installed on combustible roofs with no fire-resistant covering.
External influences can cause solar panel fires. Moisture and water ingress into parts of the PV system, such as the DC and AC connectors, pose an obvious risk. The build-up of dirt, bird droppings, and foliage on PV panels can all lead to shading, causing hot spots which escalate to burning. But it is far from clear that sufficient, if any, consideration is given to these matters.
Solutions may for a time be hailed as the next best thing, only for the reality to be less encouraging.
Heat pumps have in the past been promoted as a key part of the transition to cleaner heating. Government incentives are designed to address the cost of installations. But in addition to the upfront costs, concerns about electricity prices compared to gas, as well as the need for home modifications to optimise their efficiency, all have led to a lack of uptake in widespread adoption. The government has been warned that heat pumps remain too expensive14.
The ever-changing landscape
It is to be assumed that setbacks in one area will continue to mean innovations in others.
A ban beyond 2035 on the sale of gas boilers has now been scrapped15. But minimum standards for energy efficiency in newly built properties under the rules will preclude the installation of gas boilers.
Solar farms The UK government has pledged to treble the UK’s capacity to generate solar power over the next five years6. But the fact that this might not be termed as new technology has not meant that the risk of fire has been eliminated.
The commercial sector
Whilst solar farms are built better than domestic solar panels, it is the standards applied to their maintenance which remains the concern.
Download the Corporate Risk Radar report
Green technology
Risks for 2025
The pace of change continues to grow. The technologies required to harness those sources remain in their relative infancy.
Insurers are seeing higher payouts due to weather-related damage, with claims surging. In a positive step, homeowners and businesses are investing in greener properties. But this shift brings the new risk of accidents involving modern green appliances.
The drive to reduce greenhouse gas emissions is far from new. Nor is the fact that it has brought with it innovations in identifying renewable energy sources. The pace of change continues to grow. The technologies required to harness those sources remain in their relative infancy.
Inadequate installation runs risks of fire from faulty wiring, incompatible fixtures and consequential resistive heating, from overheating of connections. The same issues can also result in fire following electrical arcing.
None of this is helped by the fact that homeowners often have no real knowledge of what it is that has been installed. This is acutely so in the context of long-term ‘rent-a-roof’ arrangements arising from the now defunct government incentivised Feed In Tariff scheme. This has seen properties change hands within the life of contracts between homeowners and owners of the equipment.
A significant proportion of fires arise in older-generation solar panels installed under that scheme3. The demise of the scheme will mean that these older installations will in due course be phased out. For the time being, many remain in place.
It is an industry section arguably in need of much tighter regulation.
Batteries Lithium-ion batteries can cause fires for a number of reasons. That fact, as well as the measures4 which can reduce the risks, is perhaps not fully appreciated by the general public. This has not stopped risky applications, given what is an understandable desire to save money.
Used batteries are recycled. Do-it-yourself projects range from wiring up a few old car batteries, to charge pumps for a garden pond, to larger-scale projects. An entrepreneurial approach, so long as it is by those who know what they are doing, might be admirable. The danger is the availability of such solutions online5. Their inevitable application by others might better be defined as ambitious. It is difficult to lay blame on those who, after all, are not professionals. When fires occur, they may well be identified as fortuitous or accidental.
There has been a push for solar panels to be backed up by batteries. That itself brings with it the prospect of aggravation of a fire which has already broken out elsewhere.
As climate change accelerates, its effects on properties are becoming more pronounced. Rising temperatures are shifting heating and cooling demands, while flooding and subsidence risks are increasing, particularly in vulnerable areas. Commercial properties are also adapting to the push for sustainability, raising concerns over asset values.
To better understand these evolving challenges, we have created our Eco Properties tool, to greater understand the risks of these new technologies.
Explore our Eco Properties tool here
A concern first recognised in 20177 was that many solar farm incidents are not even reported, as O&M companies tend to deal with issues as they arise, particularly where, perhaps only by good fortune, there is no injury to buildings or people. What is clear, however, is that fires have continued to occur in 20248.
Compromise in the quality of maintenance has come about in the context of the financing of solar farms, coupled with short-term commercial views. Farms are owned by special project vehicles. Responsibility for their maintenance is subcontracted to companies which are not required to adhere to standards which in other sectors would be described as best practice.
Information about the best practices which have developed in established sectors is easily available. However, the absence of their application by solar farm maintenance companies has been apparent in the course of forensic investigations. The question is how to improve on this reactive approach in a market driven by minimal cost contracts. Most of the time installations in solar farms do not cause fires. Needless to say, the fact remains that, when they do, the impact can be very significant9.
Wind farms Government subsidies continue to incentivise contracts10. However, cut-off dates will mean a rush of competitive bidding. In some cases, this may mean a selection of contractors which prioritises availability over quality.
Battery farms Concerns over the potential for batteries to cause fires are not limited to the domestic context.
Battery Energy Storage Systems (BESS) stockpile energy from renewable sources such as wind turbines and solar farms which is not needed immediately. That energy is stored inside lithium-ion batteries. Whilst fires may be rare, they are a real danger. They are also difficult to put out11.
The UK’s National Grid is required to manage fluctuations in supply with demand. This is challenging12 when the target is to achieve net zero carbon production. As more power comes from wind and solar, the need for BESS grows.
A drive to look to battery farms as an alternative source of power has been met with real concerns that the dangers may outweigh the benefits13.
The domestic context
Whether hydrogen is the answer remains to be seen. The idea is that hydrogen is produced by green sources and does not emit carbon dioxide. But given the example of heat pumps, it is difficult to see what emerging technologies are in fact around the corner.
Miniature wind turbines, once thought to be a darling technology, do not, it transpires, and in all reality, produce any useful level of output16.
New technologies, coupled with the hasty implementation of supporting installations, are likely to persist. However, this doesn’t guarantee that emerging businesses will always have the necessary expertise. It is encouraging that some do seem to17, but better regulation is still needed.
Self-certification The drive to move towards zero emissions has produced a rate of innovation which has been rapid. This has brought with it its own dangers. A disconnect persists. There is a gulf between, on the one hand, the pace of change, and on the other, the standards applied. Those standards are both in the installation and the maintenance of the infrastructure required for the new technologies.
This is not helped by the fact that self-certification remains the norm. A public perception of quality is all too easy to create. Membership of what are now household names, such as Checkatrade, requires no more than payment of a fee.
Emerging designers & suppliers On 31 July 2024, the UK government announced a budget of over GBP 1.5 billion to deliver ‘homegrown clean energy’18. A substantial part of this involves financial incentives, which have created a dash for subsidies.
Unsurprisingly, the priority has been to make things fast but not necessarily right. As a result, there continues to be no track record to rely on. There are very few big names to look to for comfort.
A space to watch At the outset of 2025, it remains clear that the analysis by insurers of risks arising from emerging green technologies will be, for the time being, something to keep under review.
A pervasive concern arising from the issues discussed above is a lack of data which permits reliable analysis of risk for insurers. The emerging technologies are just that. And with novelty comes a lack of expertise and much needed regulation. All of this will continue to make these areas of inevitably heightened risk.
A further concern will continue to be that of the potential for underinsurance. Asset owners need to take care to ensure the regular maintenance and inspection of specialist new technologies. They should similarly be making sure they have properly assessed the financial impact of the damage. Whether that is always given sufficient priority by businesses is something for insurers to be focused on. Asset reinstatement values are increasing, resulting in underinsurance continuing to be one of the major risks that is facing the industry.
Solar panels Hand in hand with industries that have seen rapid growth have been installation practices which are too frequently poor. The perhaps now familiar phenomenon of the ‘solar cowboy’ continues to be a concern.
MEET THE AUTHORs
GUEST AUTHOR
Ben Lister Forensic Investigator at Hawkins Forensic Investigation
Charlie Clements Senior Associate, London
Ben Lister is an electrical engineer with over a decade of experience working in electrical system analysis and design for power stations, transmission and distribution grids, battery storage systems, and renewable energy installations both industrial and domestic. Since joining the Hawkins’ Leeds office, he has investigated electrical faults caused by equipment failure, by poor workmanship, and by substandard design.
Ram, L. (2024, May). UK reaches new solar PV milestone. Renewable Energy Installer & Specifier. https://www.renewableenergyinstaller.co.uk/2024/05/uk-reaches-new-solar-pv-milestone/ Jalowiecki, K., & Low, H. (2024, July). 'I've seen solar panels go up in flames before'. BBC. https://www.bbc.co.uk/news/articles/c4ngx01m611o Price, B. (2024, July). Solar panel fires, risks & safety UK. Heatable. https://heatable.co.uk/solar/advice/solar-panel-fires (2023, July). Why do lithium-ion batteries catch fire? Fire Protection Association. https://www.thefpa.co.uk/advice-and-guidance/advice-and-guidance-articles/why-do-lithium-ion-batteries-catch-fire- (n.d.). 2.4kWh DIY powerwall from recycled 18650 lithium-ion laptop batteries. Instructables. https://www.instructables.com/24kWh-DIY-Powerwall-From-Recycled-18650-Lithium-io/ Schofield, B. (2025, January). Why more mega solar farms are coming to the countryside. BBC. https://www.bbc.co.uk/news/articles/c626w5kq9kqo (2017, July). Fire and solar PV systems - Investigations and evidence. The British National Solar Centre. https://assets.publishing.service.gov.uk/media/5a81d3c340f0b62302699602/fire-solar-pv-systems-investigations-evidence.pdf McCrum, K. (2025, February). Firefighters called to solar farm with National Grid on scene. Lincolnshire Live. https://www.lincolnshirelive.co.uk/news/lincoln-news/firefighters-called-solar-farm-national-9122945 (2022, October). How solar farm fires can damage the environment. Firetrace International. https://www.firetrace.com/fire-protection-blog/how-solar-farm-fires-can-damage-the-environment (2024, August). New UK Government shows impressive determination on wind energy. WindEurope. https://windeurope.org/newsroom/news/new-uk-government-shows-impressive-determination-on-wind-energy/ Sanderson, C. (2024, May). Fire burns for five days at huge lithium-ion energy storage facility. Recharge. https://www.rechargenews.com/energy-transition/fire-burns-for-five-days-at-huge-lithium-ion-energy-storage-facility/2-1-1646389?zephr_sso_ott=sGx9fs Airey, R., & Stokes, S. (2023, August). BESS: The charged debate over battery energy storage systems. BBC News. https://www.bbc.co.uk/news/uk-england-leeds-66584335 Evans, D. (2025, January). Explosion fears over proposed huge battery farm. BBC. https://www.bbc.co.uk/news/articles/c30dn61m64eo Stallard, E. (2024, March). Heat pumps still too expensive, government warned. BBC. https://www.bbc.co.uk/news/science-environment-68575271 Horton, H. (2025, January). UK government scraps plan to ban sale of gas boilers by 2035. The Guardian. https://www.theguardian.com/environment/2025/jan/06/uk-government-scraps-plan-to-ban-sale-of-gas-boilers-by-2035 Rowlatt, J. (2009, December). Ethical Man blog: Why micro wind turbines don't work. BBC. https://www.bbc.co.uk/blogs/ethicalman/2009/12/why_micro_wind_turbines_dont.html (2024, May 16). Finding the truth: The dangers of infrared heaters and why Sundirect stands out. Sundirect Technology Ltd. https://www.sundirect-heater.com/blog/2024/05/16/finding-the-truth-the-dangers-of-infrared-heaters-and-why-sundirect-stands-out/ (2024, July). Record breaking funding for clean energy in Britain. GOV.UK. https://www.gov.uk/government/news/record-breaking-funding-for-clean-energy-in-britain
Compromi Instead, the accepted norm is common practice. The reality is that this is driven by economic concerns and not a proper analysis of risk. A reality is likely to be a perception that losses caused by fire will be covered by insurers. Conversely, funding quality maintenance impacts on the bottom line.
Village communities in Tanzania are still strongly linked to their beliefs and history over the piece of land that they occupy. The land is usually within specific families for a number of generations, including traditional practices and beliefs on supernatural deities who are attached to their land (usually their ancestors buried on the same land). There are firm beliefs that the ancestors play a role in their and their children’s lives. Regardless of how much money is payable for compensation, such communities feel that they are losing connection to their way of life, their ancestors and deities who are believed to be the source of their livelihood and existence. In these instances, the issue is not money or a better life in alternative properties offered by the investor through relocation programmes, it is spiritual, and it becomes more complicated to reason with such communities.
Such families, when re-located to such housing projects, are left struggling to survive because they do not have skills to offer in the market in exchange for money to finance their way of life. They need land and animals to live the way they lived, and most of them may not be willing (or be able) to embrace the modern way of life, which is largely cash-dependent.
Seeing the challenges from the communities’ perspective
The above are just a few causes of communities’ resistance that investors encounter when acquiring land in most African countries. There is a way to overcome and address these issues in advance by implementing the following (among others):
For generations, the communities occupying these remote pieces of land have survived on subsistence farming, animal husbandry and traditionally most have never crossed the borders of their villages, let alone travelling to another region. When their land is acquired for investment purposes, they are promised money, and it might appear as an attractive deal from the investor’s perspective, but for such communities, they have lived for generations with little to no money for pro-longed periods of time. They measure wealth through different means, e.g., the number of wives, children and cows. It is not that money doesn’t have value to them, but money doesn’t measure success from their perspective, and the opportunity to venture into other areas to set up their lives after being removed from their original land is not something they consider as an achievement or promising. They see it as the end of their way of life by being introduced to other areas which neither them nor their ancestors have ever set foot in.
Usually, the law offers two options, either pay adequate compensation or relocate such communities to alternative land. For investors who opt for re-location, whilst it may be more beneficial than payment of compensation in cash, the alternative land may not be sustainable to the way of life that these communities are used to. For example, the investor implements expensive and state-of-the-art housing projects that offer each family in the community better house made of bricks, better toilets, access to clean water and overall a modern house suitable for a good standard of living. However, there is no land left within the compound for farming, rearing of animals or allowing multiple wives to one husband to be accommodated in the same compound. From a perspective of a modern way of life, the new planned housing appears better than what most of these communities live in i.e. thatch houses, with no toilets and no separate rooms for children or animals, no running water, etc., but they had ample land for farming and food for their animals.
Investors should understand that the measure of development, satisfaction and success differs from community to community, and person to person. There is no one-size-fits all solution, and money may not carry the same value or importance to all communities and all persons alike, even if it is within the same emerging markets.
Small land is a lifeline for the survival of large families
What is critical to understand is that land for the local village communities is a lifeline to their survival. It might appear that the land is not as developed and there are only subsistence farming activities over the property, and maybe few animals, but this is what these communities survive by. Cultivating crops for their own food, small huts to live in, with few cows for milk and chicken for eggs is how their generations have survived. Whilst investors acquiring their land pay compensation as required by the local laws, and the money may appear to be more than what the entire property is valued at taking into account the meagre development on the land, money gets depleted fast and most of these communities eventually end up with no money and no land to live or farm at. Most of these communities do not understand money economy and such pay outs appear large but due to lack of knowledge on investment or business, the money is consumed over a period of time and depleted.
While contemplating taking local community land for investment projects, even with full support from the relevant Government i.e. from the village level to the Ministerial level, investors should look at the community and consider what alternatives can be offered to ensure that their way of life is maintained as much as possible and not throwing money to every problem. Offering a suitable alternative land, which is not further off from where the communities were living, is a better solution than paying full compensation in money. At the same time, the investor must afford such communities with adequate alternative land for their continued subsistence farming activities whilst offering better housing than their former residences. Promising modern employment opportunities to the communities even after the investment is operational may not be a fit-for-all communities and/or persons because that is not how they have survived historically, and neither do they have the skills to take advantage of the employment opportunities offered by the project. Also, the project can only accommodate so many of the community members, and agriculture activities remain to be the best and reliable solution for the long term.
ast areas in African countries are not densely populated leaving large portions of land open to further developments and investments. Land remains in high demand globally, and as of recent, multinationals are looking for land in emerging markets for agricultural, mining, and other
V
Over the years, Tanzania has gone through land law changes and overall, freehold land ownership was abolished, and all land ownership is subject to a maximum tenure of 99 years, renewable. Tanzania is open for investment especially in agriculture, commercial and residential buildings, mining, oil and gas, and tourism, all of which are land intensive projects. These projects, if managed well, bring benefits to the country and the surrounding communities through taxes, employment and overall CSR obligations imposed on investors under the local laws. When it comes to land acquisition for investment purposes, investors need to understand, take into account and factor in the following in their overall investment initiatives and plans:
Uncertain future
Amalia Lui Partner, Dar es Salaam
economic activities. Whilst investment in land within Africa is economically beneficial to Africans, it regularly leads to ongoing clashes with local communities who are displaced due to the mass acquisitions of their land.
In this article, we explore the complexities and risks associated with purchasing land in Africa, using Tanzania as a case study, emphasising the importance of thorough due diligence, understanding legal frameworks, and navigating regulatory uncertainties to mitigate potential challenges.
International investors seek investment projects which are highly supported by African Governments, but when it comes to land acquisitions, which appear to be plenty in most African countries, foreign investors face critical challenges in securing land for their projects. Even when they do so, there are continuing and repetitive disputes with local communities throughout the project.
Generations, history and beliefs
Unsustainable relocated land
Under the law, such communities must be notified and involved in the process of valuation of their land. Most of the detailed discussions are usually held by village authorities and their committees, but at times the individual community members are left in the dark on most of the matters. Investors must understand that, as much as there are Government bodies who they have to engage, investors shouldn’t forget that the ultimate affected persons are the individual community members. Efforts should be made to make sure the individual community members are included in the decision-making and establish what the community members need or how to structure the process to accommodate their way of living.
Under the laws of Tanzania, mandatory CSR is currently imposed in the extractive sector, but most other sectors (e.g. agriculture negotiations) are usually done with village authorities regarding what the investor will do for the community as a whole. CSR is usually implemented after the project is established or simultaneously, and it is for a good cause because the guarantee of being allocated land without community resistance is low, meaning an investor wants to ensure that all its rights over the land are granted before the investor puts money in a CSR project. However, having CSR initiatives done earlier on i.e. during the acquisition phase, has proved to reduce the risk of resistance from communities and establish trust in the long run. It goes without saying that such CSR projects and commitments must be in writing and signed by the authorised persons from the Government’s side. The CSR programme should involve educating and equipping the community to enjoy the benefits of the project in the long run.
Open communication and involvement throughout
Corporate Social Responsibility (CSR)
Communities should be engaged and used early on in the project and gain income from such initial initiatives as opposed to promising them employment after the project is operational, which can be more than 5 years later. The investor must be intentional in creating opportunities and sources of income for the locals (who are mostly unskilled and uneducated) when the project is still in its initial phases and see growth and alignment with the community over a prolonged period of time. Call it intertwining the interests and success of the project with the community, meaning the community members become more invested in seeing the project succeed because they can see direct benefits from the project. This is the same view as the industries operating in remote communities in Europe and America – one can see how the community’s success is so intertwined with the industries that they would protect the project as they would protect their own properties.
This is what most investors underestimate when seeking to acquire land for investment in Tanzania, and in most African countries. Despite the area concerned being underdeveloped and people living in to what appears to be poverty, such communities have survived like that for generations and they are in no hurry to be relocated, and most of them never thought or wished for relocation. Most of them just need basics like water, access to hospitals, seeds, insecticides and maybe a market for their small produce. When looking to acquire their land for investment purposes, an investor must allocate adequate time for this exercise because it is not just about money and contracts, it is about changing the minds of these communities to be open to the offers by the investor and see the benefits to their individual’s lives. These communities want to be involved and have their queries answered, and the concept of time does not carry the same value to them as it does to the investors. All they have is time, and being hurried or pushed is not something these communities take positively. Whilst valuation exercise should be undertaken promptly, during this exercise, time should be afforded to the individuals to address their concerns and to be given an opportunity to see what the alternative life offers after being removed from their land.
Shared benefits
Time
It may appear that the communities are poor with no money and a very low way of living, but what they have is pride. It would be a mistake for any investor to look at them as persons who are destitute (despite appearing as such) and think they can be pushed around. They do have their own way of resisting and end up costing the investor large amounts of money and still fail to acquire their land. Communication breakdown is common, and what follows are disputes and litigation which will delay the acquisition, and the project as a whole. The community needs to see the investor as one of them, who values their inputs and involves them in the project processes, gives them time, and touches the lives of each of these individuals in singularity. Such projects have a higher chance of success.
Any type of business is a gamble because any business has the potential for success or failure, and the same is applicable for investment in land. Overall, land acquisition in African countries, should be handled in a delicate way and afford a clear communication between an investor and the community involved. The investor must consider what is critical and important to each community and implement the acquisition of land by meeting what the community considers important, as much as taking into account the land acquisition processes stipulated in the law. Offering alternative land which allows a continued way of life that the communities are accustomed to is better in the long run, and allowing the communities to play a role in the project from the onset will offer benefits to the project in the long run. It is worth closing on this note: ‘Success means different things to different people’ and each acquisition should be subject to its own unique requirements and implementation processes.
Pride
Conclusion
Success means different things to different people and each acquisition should be subject to its own unique requirements
increased exposure to regulatory actions;
supply chain disruptions, leading to delays and increased costs;
Interestingly, despite the global focus on corporate social responsibility and the E of ESG being such a hugely important topic, climate change has not featured in the top 7 risks for any region or industry this year. Dropping away completely from its number one spot in Great Britain in our 2023 survey. Yet it is clear any disclosure requirements create liability and the potential for greenwashing litigation gaining momentum.
Rounding off the top seven list is concern about bribery and corruption. Whilst it has made the list, concern is felt more in the largest of companies – 81% of responders in companies with a revenue over USD 5 billion ranked bribery and corruption as a very or extremely important concern, compared with 51% of responders in companies with revenue below USD 50 million (there was not a notable difference when viewed by sector). There are many reasons for this, including that large companies typically operate in many jurisdictions, meaning they need to navigate different regulatory landscapes and the complexity of operations in large companies makes it harder to detect and prevent corrupt practices (linking back to the need for robust internal systems and controls).
Bribery and corruption: A top concern for larger companies
These proceedings claim that the company in question did not have adequate systems and processes in place to deal with a data breach and that this, in and of itself, was material information not provided to the market. These proceedings are the first of their kind in Australia and are separate from the additional privacy litigation brought by the customers who were affected by the breach.
The top seven risks
Once again, the annual global Directors’ and Officers’ (D&Os) survey provides a valuable insight into the risks that are of concern to D&Os around the globe.
There are potentially huge knock-on effects not only for the company and its workforce but also in the border communities and economies in which companies operate. Boards will need to fully understand all this before acting or could bear the brunt of claims arising from the mishandling of their corporate and social responsibility policies.
Concern about data loss comes in second place, having swapped positions since last year with concern about cyber risks (though it is worth noting that concern levels for both have remained fairly steady over the last five years). It is no surprise that these risks remain near the top, given the significant costs that can flow from data loss, which is often (but not always) linked to a cyber event (for example, leaving confidential information on public transport, improper disposal of sensitive info — not shredding —, physical theft etc).
Regulatory and legislative frameworks are constantly evolving in this area. For example, in the UK, the Data (Use and Access) Bill is currently progressing through the UK parliament, which seeks to make changes to the UK GDPR and DPA 2018, with the Cyber Security and Resilience Bill also set to become law. Both will increase regulators’ enforcement powers and place a burden on D&Os to get data management and cybersecurity right. In Australia, long-awaited reforms to the Privacy Act introduced a statutory tort for serious invasion of privacy.
In addition, the prospect of a company facing a group action has increased. For example, in the UK, claimants are testing the boundaries of the UK mechanisms to bring mass data loss claims.
Elsewhere, in the EU, the German Federal Court of Justice recently determined that a simple temporary loss of control over personal data resulting from a GDPR breach could be considered non-material damage, warranting a compensatory award, even in the absence of direct misuse of the data to the detriment of the individual or any other harmful effects. This could embolden group claims in the EU to be brought on this basis. Shareholder actions are also possible (already present in the US) – for example, in Australia a shareholder class action was brought in 2023 following a data breach that saw an 18% share price drop.
This last point leads us to the fifth concern on the top seven list – risks deriving from systems and control failures, which was a new entry on the top seven last year. Failures in this regard provide the foundation and launchpad for an array of exposures for companies in a multitude of different areas. For example, criminal proceedings due to inadequate financial crime controls, civil actions (such as the shareholder class action mentioned above) and significant regulatory fines for breaches which could have been prevented by the implementation of robust controls. It is vital that D&Os adequately address internal controls or risk severe consequences.
A new entry, at number six on the top seven list, is the risk of civil litigation, creeping one spot above bribery and corruption and knocking breach of sanctions out of the top seven. It is worth noting that concern regarding breaching sanctions is still high overall, but when one looks at the split by company size and region, this concern is largely felt by D&Os in the largest companies in Europe, which is to be expected. It is also worth noting that the percentage of D&Os considering civil litigation a very or extremely important concern in 2025 has not changed since 2024 (63% of responders), but both years saw a significant jump from the 38% of responders in 2023 which considered it a very or extremely important concern. We explore why civil litigation has risen up the ranks in our separate Civil Litigation article, including the impact of social inflation and the key drivers behind litigation.
Overall, the list of the top seven risks reveals the various difficulties and challenges that D&Os encounter, which could have serious implications for them. To avoid and reduce these risks, it is essential to have effective risk management strategies and appropriate systems and controls in place. A failure to ensure robustness of these may not only have a material impact on business operations and financials, from large fines and penalties, there is also the potential for shareholder litigation following stock drops brought about because of the reputational damage to companies caused by such failure.
alienating consumers and investors, both of whom are increasingly socially conscious in many jurisdictions, making it harder to attract and retain investment;
GUEST AuthoR
Eve Richards GB Head of FINEX D&O, WTW
Mandip Singh Sagoo Partner, London
Eve has 18 years industry experience, having previously held a number of senior underwriting roles with major global insurers. Most recently Eve was acting as the Head of Financial Institutions at AXA XL. As a result, she has a wide market network and strong relationships in the sector. Eve has a focus on large international D&O and crime risks and an in-depth knowledge of complex wordings. Eve will retain an active involvement on key accounts, delivering strategic, technical and market support to the client and team.
(2024, March). Health and Safety Executive Annual Report and Accounts 2023/24. GOV.UK. https://assets.publishing.service.gov.uk/media/674710ce7b2b8dd6bf1474c8/HSEannualreportaccounts23-24_v15_ONLINE.pdf (2024, September). Corporate social responsibility and financial performance: A meta-analysis. The Journal of Academic Science. https://www.researchgate.net/publication/383692778_Corporate_Social_Responsibility_and_Financial_Performance_A_Meta-_Analysis_The_Journal_of_Academic_Science (2025, January). Business sustainability and its effect on performance measures: A comprehensive analysis. MDPI. https://www.mdpi.com/2071-1050/17/1/297
Regulatory risk, more generally, continues to be of concern (here, the number four concern), and with good reason. The regulatory landscape is complex, with a range of new rules and regulations continually being introduced (especially in the financial services sector), thus increasing the chances of non-compliance, leading to significant penalties for companies and, potentially, personal liability for directors. Additionally, in our Regulatory article within our survey report, the political environment has a profound impact on the regulatory agenda, making it difficult, especially for global enterprises, to understand what is expected of them.
The exact reason is not precisely clear, though high-profile cases (such as in the UK where high fines have been imposed and the 92% conviction rate of the health and safety executive1) leading to significant criminal and regulatory actions, have definitely had an impact.
he headline point is that health and safety risks continue to be the top concern for D&Os, with 80% of responders considering it a very or extremely important concern.
T
In Australia, industrial manslaughter has now been introduced in all states and territories, and a number of workplace legislative reforms came into effect in 2024. There is also no doubt that the pandemic highlighted the importance of healthy employees. There is also a growing willingness by boards to accept that mental health is as important as physical health, and a recognition that companies that consider and look after their employees’ wellbeing leads to greater productivity and improved financial performance.
Whilst the health & safety concern numbers have reduced slightly on last year (down 4%), social risks as a whole feature prominently in the list of concerns and, when looked at over a five-year period, the increase in concern is notable. For example, breach of human rights within or by business operations has risen from 23% of responders considering it a very or extremely important concern in 2021 to 62% in 2025, and in several regions, making it into the top seven risks.
Health and safety – a deeper dive
Similarly, concern about supplier business practices has risen from 27% in 2021 to 59% in 2025.
Why have social risks climbed the ladder on concern over this period? Our view is that it is now accepted that by integrating social risk considerations, directors can ensure their companies are better positioned for sustainable growth and resilience in an evolving business landscape, coupled with some studies2 that conclude that responsible social practices result in better financial performance. Failure to adequately embed social risks within company operations could lead to a range of exposures, including:
reputational damage;
decrease in productivity and morale – increased labour disputes, high turnover, failure to attract top talent etc.
Data loss, a rising concern?
Rising tide of group actions and shareholder Suits in data breach cases
Regulatory landscape: A growing concern for companies and directors
A new entry…
climate change has not featured in the top 7 risks for any region or industry this year.
The importance of robust risk management
27%
59%
in 2021
in 2025
Supplier business practice concerns
Large companies also come under greater regulatory and public scrutiny and scandals can lead to significant penalties and large civil actions, such as shareholder group actions. Indeed, some of the UK’s current large group actions follow findings of bribery and, in Australia, an action by the corporate regulator against the entire board of directors of a gambling company for failing to give sufficient focus to the risk of money laundering and criminal associations for high spending international customers, continues to be monitored closely.
The volatile geopolitical landscape means agility is more important than ever. However, as Barbosa explains, the Corporate risk radar report identifies an “agility deficit”, with less than half of respondents (48%) saying their organisation can adapt to rapidly changing circumstances. Addressing this means “all those risks must be opportunities,” says Barbosa. She probes guests on how this trend is playing out within their regions, across issues spanning regulation, trade and manufacturing shifts, and funding. Both the Middle East and Africa (MEA) and Southeast Asian markets are experiencing rapid growth, despite geopolitical tensions around the world. In MEA, Bassiri Gharb points to opportunities arising from the diversification away from oil and gas, and the dynamic regulatory environment. In Southeast Asia, van den Bosch says huge, young populations, and an increasing middle class mean that “we’re actually very bullish on the region as a whole.” Discussing the impact of regulatory change, Bassiri Gharb argues that prioritising international best practice in MEA, through initiatives such as Mission 2030 and the Digital Economy Strategy, has opened the door to more international investment. Greater regulatory clarity and aligning with international standards provides “more space for investors, reducing uncertainty, and offering a stable environment,” she says.
Finally, regarding digital infrastructure and regulation, Bassiri Gharb explains that in MEA, investments in high-tech ecosystems have sparked cyber and privacy regulations, to allay any investor concerns. However, as in other areas of risk mitigation, she says the key is “finding the right balance; you don’t kill the opportunities, but also make sure the safeguarding is there.” For van den Bosch, the future is bright in Southeast Asia: “Asia is the future. With a growing population, growing economies, generally stable governments, I think it’s where we will find the best opportunities.”
In Southeast Asia, geopolitical tensions have brought opportunity through the relocation of manufacturing to the region. This, combined with the easing of foreign ownership restrictions, is driving increased demand for logistics services, including the expansion of warehouse and distribution centres, and investment in infrastructure such as ports and terminals. Energy is a key sector for Clyde & Co and van den Bosch raises challenges currently faced by clients in securing financing for oil and gas projects. Sparked by ESG concerns amongst primarily UK and European banks, this is hitting upstream suppliers, contractors, and FPSO (Floating Production Storage and Offloading) companies, forcing them to adapt by seeking funding via US and Japanese banks, alternative credit, prepayment financing or other structures. Returning to MEA, Bassiri Gharb explains how sector diversification is creating opportunities for foreign companies and investors. She mentions the UAE’s Green Economy strategy and Neom in Saudi Arabia, as two examples, stating: “You can easily see how partnerships between Middle Eastern and Western players can form into great joint ventures.”
(...) the key is finding the right balance; you don’t kill the opportunities, but also make sure the safeguarding is there
he Corporate risk radar podcast is back for a second series to explore the findings of our annual risk report. In this first episode, host Eva-Maria Barbosa, explores the opportunities
arising from the biggest risks facing organisations today, and how they can take advantage. Barbosa is joined by Ton van den Bosch, a Partner specialising in the Asia Pacific region, and Roshanak Bassiri Gharb, a Partner based in Dubai.
Roshanak Bassiri Gharb Partner, Dubai
Ton van den Bosch Partner, Singapore
Eva-Maria Barbosa Partner and Chair of the global corporate and advisory group, Munich
Rosehana Amin Partner
Authors
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Contents
