Swiss Re Flags Extreme Heat as Cross-Industry Risk Factor

Extreme heat has emerged as one of the most consequential global risks, threatening not only public health but also infrastructure, agriculture, and critical business sectors, according to Swiss Re's 2025 SONAR report. The report identifies extreme heat as a growing systemic peril with wide-reaching implications for insurers and the global economy.

"Extreme heat used to be considered the 'invisible peril' because the impacts are not as obvious as of other natural perils," Jérôme Haegeli, Swiss Re's group chief economist, said. Longer and hotter heat waves are now disrupting sectors ranging from energy to telecommunications and increasing volatility in risk portfolios.

Data show that heat waves in the US are now three times more frequent than in the 1960s, nearly one degree hotter, and lasting a full day longer. This shift is straining multiple sectors. In telecommunications, high temperatures threaten data center operations and terrestrial cable integrity. In agriculture, extreme heat intensifies the risk of crop failure. It also increases the risk of wildfires, with insured wildfire losses between 2015 and 2024 totaling $78.5 billion.

Liability exposure is also mounting. The report cites a 2021 lawsuit in which a plaintiff sought $52 billion in damages from fossil fuel companies over losses linked to climate-related extreme weather events. As heat-related events become more frequent, insurers could see a surge in climate-related litigation and liability claims.

The report also flags the rise of secondary risks. Prolonged heat can create favorable conditions for toxic fungi and lead to more workers compensation claims from heat-exposed employees. It also challenges healthcare systems already under stress from aging populations and infrastructure demands.

Alongside climate-related issues, Swiss Re's SONAR report highlights emerging structural risks such as declining institutional trust and surging artificial intelligence (AI) incidents. AI-related risk events rose by over 60 percent from 2023 to 2024, with one-third stemming from system failures.

"Between the growing risk of extreme heat events, emerging liability risks or the changing scope of AI-related risks, it's clear the conversation must evolve beyond individual topics to examine how large macro trends are now reshaping today's risk landscape," Patrick Raaflaub, Swiss Re's group chief risk officer, said.