UK Utilities Risk Report 2026

Marsh is pleased to have worked with Utility Week to produce the fifth consecutive edition of the UK Utilities Risk Report.

This year’s findings provide a practical view of the risks shaping the sector today – and what utility leaders should prioritise to protect service delivery, balance sheets, and long‑term investment plans.

A note on timing of the survey – the research underpinning this report was completed before the recent escalation of the conflict in the Middle East. While respondents’ views reflect conditions at the time, many of the top risks identified already align with evolving global pressures. Further geopolitical instability may further amplify cost and supply‑chain pressures in the months ahead.

What the 2026 report covers

The top risks facing UK utilities in 2026 and how their relative importance is changing
Market and insurance placement trends affecting capacity, pricing and coverage
Practical resilience measures and risk‑financing options tailored to utilities
Sector‑specific implications for water, electricity, gas, and digital infrastructure
Short checklists and board‑level actions to close critical gaps

Headline report findings

Cyber risk remains the leading concern. Attack frequency and severity increased through 2025, and the sector’s growing reliance on smart technologies and AI makes stronger cyber resilience and incident readiness a priority.
Regulatory risk is a major, recurring theme: four of the top ten concerns relate to regulatory change, from business plan appeals to sector overhauls that affect capital and investment capacity.
Cost pressures are rising. Early indicators following recent geopolitical events point to higher energy and input costs, which are particularly significant given the way regulatory settlements and business plans are structured.
Supply‑chain and contracting risk are contributing to operational fragility. Contingency planning and clearer contractual risk allocation are now essential across procurement and outage management.
Insurance market dynamics remain challenging for certain perils. Capacity and pricing constraints for windstorm, flood and cyber exposures are driving greater use of alternative risk solutions.
Digital infrastructure demand (data centres) is creating new stresses on utilities – more grid connections, higher power requirements and increased water use for cooling – requiring coordinated planning across networks and planners.

Sector implications

Financial resilience: With budgets built on forward‑looking cost assumptions, utilities that have not secured price stability (for example, via long‑term power purchase agreements) face a growing risk of actual costs materially exceeding forecasts.
Investment and delivery: Accelerating regulatory changes and compressed policy timetables heighten uncertainty for capital programmes and could limit investment capacity unless risk‑adjusted planning is adopted.
Operational resilience: The pace of change across cyber, climate and market risks is increasing the operational burden on asset owners. Prioritised mitigation and maintenance programmes are needed to protect service continuity.

Practical actions highlighted in the report

Strengthen cyber controls, run targeted resilience testing and update incident response playbooks to meet evolving insurer and regulator expectations.
Reassess procurement and contracting strategies to embed contingency provisions and clear risk allocation with key suppliers.
Apply a risk‑reduction ROI framework to prioritise capital projects that improve insurability and reduce net cost of risk.
Consider layered financing: use primary insurance for more frequent losses and captives, parametric or hybrid structures to bridge capacity and tail exposures.
Coordinate cross‑sector planning for digital infrastructure growth to ensure reliable connections and sustainable resource use.

The risks identified in this fifth edition are familiar, but they are changing faster than many organisations can adapt. Strengthening cyber and physical resilience, aligning investment with regulatory expectations, and using a broader set of financing tools will be critical to safeguarding services and enabling the sector to meet future demand.