Swiss Re’s latest SONAR report puts extreme heat at the top of the global risk agenda, but that’s just one of many structural and emerging threats facing businesses. From AI failure and institutional distrust to ultra-processed foods and toxic fungi, this year’s report challenges risk professionals to rethink resilience.
Extreme heat is now the world’s deadliest natural hazard, causing more fatalities than earthquakes, floods and hurricanes combined. According to Swiss Re’s SONAR 2025 report, up to half a million people globally succumb to the effects of extreme heat each year, and the threat is rising.
“Extreme heat used to be considered the ‘invisible peril’ because the impacts are not as obvious as other natural perils,” explained Jérôme Haegeli, Swiss Re’s Group Chief Economist. “With a clear trend to longer, hotter heatwaves, it is important we shine a light on the true cost to human life, our economy, infrastructure, agriculture and healthcare system.”
Risk managers need to prepare for heat’s wide-ranging knock-on effects. These include higher health-related absenteeism, infrastructure failure, water stress, wildfire exposure, agricultural losses, and increased insurance premiums.
Vulnerable employees, particularly outdoor or manual workers, those with existing health conditions, and pregnant women, are especially exposed, raising not only duty-of-care concerns but also potential employer liability.
The report also points to “tipping-point litigation”, where corporates are increasingly facing lawsuits for failing to prevent heat-related harms. One cited example is a US case seeking $52 billion from fossil fuel companies for losses linked to extreme weather. For businesses, this marks a shift in how climate liability is evolving: from regulatory risk to direct civil litigation.
Wider systemic impacts of heat
The report links heatwaves to a cascade of secondary risks. Prolonged heat can overwhelm healthcare systems, disrupt digital infrastructure (such as overheating of data centres), and accelerate wildfires, which alone caused over $78.5 billion in insured losses between 2015 and 2024.
In agriculture, extreme heat leads to droughts and reduced crop yields, raising both food security concerns and commodity price volatility. Companies in logistics, retail, and manufacturing reliant on global food supply chains may feel the impact indirectly through cost inflation, reputational risks, or reduced availability of inputs.
Swiss Re warns that many businesses have yet to meaningfully integrate extreme heat scenarios into their continuity planning, despite the availability of climate and health data. For corporate risk managers, that is a gap that must now be closed.
AI incidents surge
One of the fastest-rising risks in the report is artificial intelligence (AI) failure. SONAR 2025 notes a 60 percent rise in AI-related incidents between 2023 and 2024, with a third caused by outright system failure.
This is not just a concern for tech developers. For risk managers, the report suggests several pain points: model opacity, lack of auditability, misaligned incentives, data poisoning, and poorly designed governance. Generative AI has compounded these challenges, with businesses deploying powerful models faster than internal controls can keep up.
There are also insurance-specific concerns. The lack of standardised policy wordings for AI-related failures, or even clarity over who is liable when an AI error causes harm, creates exposure for corporates and underwriters alike.
Swiss Re notes that insurers are still at the early stages of product development for AI risks. For risk managers, that means any reliance on insurance as a fallback is premature. Instead, the focus must be on robust model risk management, cross-functional oversight, and effective explainability mechanisms before deployment.
Beyond the obvious: New perils on the horizon
SONAR 2025 also surfaces several unconventional risks that may catch businesses off guard.
- Toxic fungi: Global warming is making the human body more hospitable to fungi. Outbreaks of Candida auris and Aspergillus have already raised alarms. The report warns of rising health costs, reduced workforce availability, and potential liability if businesses are found to have ignored contamination risks.
- Ultra-processed foods (UPFs): Growing evidence links UPFs to a wide range of chronic diseases. If manufacturers are shown to have knowingly misled consumers or regulators, insurers and food companies could face liability claims on the scale of past tobacco or opioid litigation.
- Disinformation and deepfakes: These tools are no longer confined to politics or finance. SONAR warns they are already being used to forge insurance documents, impersonate clients, and conduct social engineering attacks. Corporate fraud risk, and the challenge of proving authenticity, is set to rise.
- Commercial drones: Rapid expansion in drone use is creating safety, liability and privacy risks. From mid-air collisions to unauthorised surveillance, regulatory frameworks are struggling to keep up with technological deployment. Any business using drones must assess exposure not only in terms of physical damage but also reputational fallout.
Swiss Re notes that each of these emerging risks has the potential to scale quickly, and that they often interact with one another. Heat, for example, enables fungal growth. AI tools can be used to spread disinformation. Litigation around health impacts may be compounded by declining public trust in institutions.
Structural threats: What’s quietly reshaping the risk landscape
In addition to emerging perils, the SONAR 2025 report draws attention to deeper systemic risks that may not make headlines but pose major challenges to the insurance and risk management ecosystem.
These include:
- Declining trust in institutions: Eroding public confidence in government, science, media and even insurers is contributing to rising litigation and more adversarial claims processes. It also threatens the social contract on which risk pooling depends.
- Uncertain mortality trends: While excess deaths from COVID-19 have subsided, baseline mortality has not returned to pre-pandemic norms. This volatility complicates life and health insurance pricing, and raises questions about long-term benefit and pension provisioning.
- Workforce shortages: Across sectors, there is a persistent gap in critical skills, particularly in digital risk, climate analytics and actuarial modelling. For risk managers, this can translate into under-resourced teams, slower response times, and poor risk data integration.
Patrick Raaflaub, Swiss Re’s Group Chief Risk Officer, contextualised these trends by urging a shift in approach. “It’s clear the conversation must evolve beyond individual topics to examine how large macro trends are now reshaping today’s risk landscape.”
What risk managers should do now
For corporate risk professionals, SONAR 2025 is more than a catalogue of hazards. It is a call to action and a reminder that many of today’s most consequential risks are not confined to the balance sheet.
Key next steps:
- Re-evaluate climate exposure, including the specific impacts of extreme heat on operations, supply chains, workforce and health risks.
- Map emerging risks that may not yet appear in traditional registers: toxic fungi, food litigation, AI incidents, and disinformation threats.
- Engage the board on structural vulnerabilities such as trust erosion, workforce gaps and mortality volatility, treating these as strategic rather than operational risks.
- Review existing cover for AI, environmental liability and reputational harm, ensuring wordings are current and exclusions understood.
- Invest in horizon scanning, not just for your sector but adjacent ones, recognising that many of these risks cut across industries.
Ultimately, SONAR 2025 is a reminder that resilience depends on the risks you see — and the ones you don’t. For risk managers, staying ahead means looking further, asking better questions, and refusing to treat tomorrow’s perils as someone else’s problem.
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