Top 5 risks for financial risk managers in 2026

From geopolitical risk, supply chain disruption, through to extreme weather events and climate change, disinformation and the proliferation of AI, CROs would no doubt agree that risk is everywhere all at once. These challenges have pushed banks to prioritise resilience, security and adaptability in their risk management strategies for 2026. As these risks continue to grow more complex and are interconnected (more so than ever before), sound risk management will require a more dynamic, tech-enabled and forward-looking approach to systemic threats.

Geopolitical risk

Overwhelmingly, geopolitical risk has continued to be a significant concern for risk managers due to its widespread impact, complexity, and challenging nature. Several factors make it particularly concerning. It has been considered the most likely risk to materialise, creating systemic risks that are difficult to predict but can spread quickly across supply chains, economies, and markets. Financial institutions find geopolitical risks less well embedded in their risk management frameworks compared to sectors with more experience (such as oil and gas), and progress has been considered somewhat slow across the financial services industry. The multi-faceted nature poses a big challenge as it is not directly quantifiable and arises from a range of interconnected political, economic, and social factors spreading across borders and sectors.

Managing geopolitical risks requires a horizontal approach that spans across various vertical risk stripes, and it demands integration into all stages of the risk management cycle – from risk identification through to risk measurement, mitigation, and monitoring. Effective management requires embedding geopolitical risk in policies, processes, and controls across all relevant functions and business units.

Looking ahead to 2026 and beyond, risk managers must develop more sophisticated frameworks toward routine integration of geopolitical risk into day-to-day risk management and strategic decision-making.

Digital disruption and AI

Unsurprisingly, disruptive technology ranks as one of the top 3 biggest concerns for 2026 for risk managers, not only due to its uncertain nature of new risks that it poses, but also the potential to amplify existing risks like fraud and financial crime. Risk professionals are particularly concerned because the technology is evolving faster than legacy frameworks can handle. Risk managers see the potential for new opportunities that will arise from AI such as growth and efficiency, however this is met with scepticism over what this truly means in practice.

Regulatory pressure has been apparent and the uncertainty of what this entails is particularly worrying for risk managers. By 2026, the European Union's Artificial Intelligence Act will be fully enforced, creating stringent compliance requirements with potential staggering fines. The EU framework is likely to become a benchmark, triggering similar regulations worldwide and creating a complex patchwork of compliance requirements. In the US, the SEC Cyber Rules now also demand greater transparency and board-level visibility into AI systems. Due to the nature of AI and its rapid evolution, regulatory requirements are constantly shifting accordingly. This is therefore making it even more challenging for risk managers to stay on top as AI governance frameworks must adapt.

For risk managers preparing for 2026, the key challenge will be developing comprehensive AI governance structures that maintain human oversight while leveraging AI's predictive capabilities to transform risk management from a reactive function to a strategic advantage.

As AI continues to transform organisations, risk managers face the dual challenge of harnessing its benefits while mitigating its unique and evolving risks. Success requires a comprehensive, adaptive approach that can evolve as rapidly as the technology itself.

Human capital risks

Human capital risks are intensifying rapidly, with talent retention maintaining its high ranking as one of the top 5 risk predictions for 2026. This reflects growing concerns about workforce stability and failure to attract or retain top talent. People are now one of the most unpredictable sources of risks for organisations, but also the most impactful. This is far more complex and harder to manage than systems or processes and as such, has now become a core pillar of effective risk management.

Human capital risks are especially critical for banks in 2026 and beyond due to the sector’s reliance on specialised talent, regulatory scrutiny, and operational complexity. Risk management teams now need new technical skills to effectively oversee AI systems and the demand for these individuals has increased. Organisations now see them as a competitive advantage, and as an essential part of the team that delivers effective risk management. The competitive landscape is challenging not only across banking, but also with tech firms and startups searching for this talent, thus leading to higher costs and retention risks. High turnover rate can then create instability which threatens operational resilience in banks who rely heavily on trust and reputation, both easily damaged by people-related failures.

Effective management of people risk requires a multidisciplinary approach that bridges traditional risk management with human capital expertise. Organisations need integrated frameworks that acknowledge the central role people play in both creating and mitigating organisational risk. This requires constant adaptation of risk management approaches in line with change of workforce demographics, market conditions, and societal shifts.

Cyber risks

Cyber risk continues to present significant challenges for risk managers in 2026, evolving in complexity and impact, despite years of technological advancement and increased awareness.

The financial stakes continue to rise, putting immense pressure on risk managers to prevent costly breaches and regulatory scrutiny. Cyber risk management has seen further challenges from AI-powered attacks which have increased in sophistication and frequency. The volume of lower-level attacks has also grown substantially in which automated attacks have lowered the barrier to entry for cybercriminals.

The knock-on impact this has on supply chains is huge, highlighting vulnerabilities and major operational flaws. Organisations need to have full visibility across third- and fourth-party relationships, amongst the various other complex tiers. The hidden risks and blind spots across deeper supply chain tiers are difficult to assess and mitigate so this is a big area of improvement for many organisations. The growing number of third-party relationships multiplies potential attack opportunities.

Cross-departmental responsibility has put risk managers under increased pressure as legal departments, compliance teams, procurement and supply chain management must coordinate and manage these risks together. This cross-functional nature makes governance and accountability more complex and is very time consuming.

For risk managers in 2026, the challenge lies not just in keeping pace with technological threats, but in developing holistic approaches that address the increasingly interconnected nature of cyber risk across organisational boundaries, supply chains, and emerging technologies. The need for comprehensive, data-backed risk management solutions continues to grow in demand and is not slowing down anytime soon.

Climate-related risks

Climate change presents one of the most significant systemic risks facing our world today, with far-reaching implications for economies, societies, and ecosystems. This multifaceted challenge requires understanding across several key dimensions and there are many layers of complexity. As such, it has emerged as a critical focus area for risk management, with significant developments in regulatory frameworks, disclosure requirements, and strategic approaches.

Many organisations are still struggling to move beyond basic carbon emissions measurement to more sophisticated frameworks in developing comprehensive financial impact assessments of climate risks.

Key areas that risk managers are focusing on for 2026 include scenario analysis, data reliability, cross-functional coordination, value chain vulnerabilities, stakeholder expectations and the evolving regulatory landscape.

Scenario analysis complexity and long-term risk assessment has proved challenging in conceptualising and modelling scenarios that extend 20+ years into the future. Along with scenario analysis, empirical climate data that meets the quality standards needed for robust financial risk modelling is limited.

Cross-functional coordination and strategic organisational re-structuring to effectively manage climate change risk is key for organisations to identify where climate-related risks concentrate within complex business models and value chains more effectively.

Alongside transition risk, keeping pace with rapidly developing climate risk regulations, risk managers must navigate these challenges while simultaneously addressing other emerging risks, such as artificial intelligence implications, geopolitical instability, and ongoing economic uncertainty. Organisations that develop more sophisticated approaches to these challenges will be better positioned to implement integrated risk management frameworks for climate risks.

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