Artificial intelligence (AI) and supply chains open new pathways to systemic stress as risks become increasingly interconnected, a new joint analysis by Swiss Re Institute and LSE finds.
The research, which analysed filings from 91 Fortune-100 companies between 2019 and 2016, revealed a 24% increase in the links between risks, with AI and supply chains emerging as key points of connection.
The findings point to a broader shift in systemic risk as threats increasingly interact across financial, digital, natural-hazard and socio-economic systems.
Analysts warn that the severity of the next systemic crisis may depend more on its location and how widely its effects spread, rather than on the initial shock size.
A reliance on common suppliers, technology platforms and critical infrastructure means disruption in one area can increasingly cascade into seemingly unrelated economic sectors, analysts note.
Jérôme Haegeli, Group Chief Economist and Head of Swiss Re Institute, stated: “Interconnected risks leave less room for error, while governments in many advanced economies have less room to respond. High debt and constrained policy buffers mean resilience cannot start when a crisis hits – it has to be built beforehand, by reducing critical dependencies, strengthening buffers and preserving the capacity to transfer risk.”
Ivan Gonzalez, Chief Executive Officer of Corporate Solutions at Swiss Re, said: “A company may look diversified until you discover that its suppliers, technology providers and customers depend on the same infrastructure. One disruption can therefore affect more parts of a business than expected. Understanding those dependencies may help companies reduce concentrations, strengthen resilience and decide which risks they can absorb and which they need to transfer.”
AI risk reporting has broadened beyond the technology sector, with the share of companies reporting AI and new-technology risks increasing by around 30% between 2019 and 2026 to encompass industries including retail, airlines, pharmaceuticals and food.
Researchers warned that widespread reliance on shared underlying models and automated operations introduces a new dimension of fragility.
If companies and financial institutions increasingly rely on common technologies and similar AI models, stress could trigger faster and more synchronised reactions.
Jón DanÃelsson, Director of the Systemic Risk Centre and Reader in Finance at LSE, noted: “Systemic crises are defined by what happens after the shock, and AI could fundamentally change that dynamic. If institutions increasingly use similar models and react at machine speed, a containable shock can become systemic before there is time to respond. The challenge is not to predict the next crisis, but to be prepared for shocks we cannot foresee.”
Concurrently, global supply chains are another key point of connection between risks, the research revealed. Geopolitical tensions, tariffs, climate events, pandemics and cyberattacks can all interact and reinforce one another through supply networks, creating multiple pathways for disruption to spread across companies and sectors.
Corporate climate risk mentions increased by around 31% since 2019. Extreme weather poses significant threats to key infrastructure, with over 25% of US data centres exposed to frequent large hail, over 40% in tornado zones, and 88% of Taiwanese semiconductor plants in extreme seismic zones.
Shocks to such concentrated, irreplaceable infrastructure threaten the wider economy. Beyond geography, market concentration is high: in 2024, three providers held 70% of cloud infrastructure, and three companies processed 97% of global credit card transactions.
Researchers cautioned that resilience must be built ahead of time because public policy levers are significantly constrained compared to previous downturns.
With sovereign debt high across advanced economies, historical cushions are thinner, leaving governments with less room to absorb external shocks.
Jean-Pierre Zigrand, Director of the Systemic Risk Centre and Associate Professor of Finance at LSE, said: “Connections can make the system more resilient when they genuinely spread risk. But common dependencies can turn those same connections into channels that amplify shocks. The challenge is to preserve the benefits of being connected without concentrating risk in the same places.”
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