GlobalData: Liquid risk forces insurers to reinvent operations and redefine protection

July 28, 2025

In an era defined by continuous disruption and systemic uncertainty, the insurance industry stands at a pivotal moment. Traditional approaches to underwriting, pricing, and risk modelling are faltering in the face of climate change, technological disruption, geopolitical fragmentation, and social instability.

Against this backdrop, the concept of Liquid Risk casts risk as dynamic, interconnected and opaque, urging insurers to adopt real‑time adaptive operations and redefine the nature of protection, says GlobalData, a leading data and analytics company. Celent, a GlobalData company, introduced a new strategic lens in its latest report, 'Navigating Liquid Risk: Rethinking Insurance for a World of Disruption'. It presents the concept of Liquid Risk—a paradigm shift that challenges how insurers perceive, evaluate, and respond to risk.

Fábio Sarrico, Senior Insurance Analyst at Celent, and the author of the report, says: 'The insurance industry is being tested at its core. In a world where even the question of ‘what is true?’ is contested, the trust that underpins insurance is under pressure. Risk has become liquid—and insurers must evolve to match.'

What is Liquid Risk?

• Fluidity: Risks flow rapidly across sectors, geographies, and time horizons.
• Interconnectedness: They emerge from the convergence of political, environmental, technological, and economic forces.
• Asymmetry: Their consequences are disproportionate and hard to anticipate.
• Unmodeled: They evade traditional actuarial tools and backward-looking assumptions.

To illustrate its origins, the report introduces the Four Forces of Liquid Risk—climate volatility, AI disruption, geopolitical instability, and social fragmentation. These forces do not act in isolation; they reinforce one another, creating complex feedback loops that overwhelm conventional models.

Why it matters now

The impact is already being felt. For example, in the climate domain, insurers are facing rising losses from extreme weather and shifting risk profiles. Traditional prediction is no longer enough. The report advocates for a move toward real-time, adaptive operations, enabled by AI, satellite data, and event-driven architecture.

Sarrico explains: 'Legacy systems are the bottleneck. They were built for a stable world and cannot respond fast enough. Insurers must transition from reactive cycles to real-time, modular operations.' The report also explores how AI-driven misinformation, deepfakes, and algorithmic manipulation are eroding the notion of objective truth—placing trust, the core currency of insurance, under siege.

A strategic framework for action

Celent offers a clear framework for navigating this environment:

• A strategic definition of Liquid Risk and the forces dismantling traditional models
• A real-time response architecture based on cloud-native, event-driven design
• New product strategies for systemic, contextual, and continuous risks
• A philosophical and technical rethink of what “protection” means in a liquid world

Sarrico concludes: 'This is not just about optimization. It is about remaining relevant. Insurers who embrace core modernization and rethink their purpose will be best positioned to thrive in a world where volatility is constant—and increasingly beyond prediction.'