The risks that CFOs may be underestimating

Not that CFOs don’t already have enough to worry about, but there are some major enterprise risks further down the priority list that warrant some of their anxiety.

The common thread running through these risks is that, while they certainly aren’t obscure or unknown to CFOs, their potential financial impact can catch management off guard and imperil a business.

Catastrophic losses. Which risks are organizations underestimating? The loss capacity from major events like natural disasters is one, according to Curtis Dubay, chief economist at the US Chamber of Commerce, when asked in a recent webinar. As examples, he cited the California wildfires last year and the flooding in North Carolina from Hurricane Helene in 2024. The LA fires were the costliest of 2025, racking up $61.2 billion in damages, according to the nonprofit research group Climate Central.

Natural catastrophes have not only gotten costlier, they’re also more frequent, Dubay said. Billion-dollar disasters have become far more common since 1980, “due to the rise in extreme weather and a growing number of people, homes, and businesses in harm’s way,” according to Climate Central.

“I don’t think we are sufficiently prepared for major disasters, because the severity of them has gone up so much, and that is very pertinent for all your businesses,” Dubay said during the webinar hosted by Travelers Institute, the insurance company’s public-policy arm.

Going nuclear. In December, CFO Brew asked finance leaders to identify what topics they felt were important for CFOs but don’t always make headlines. For Bereket Haile, CFO of risk-management society RIMS, it was the emerging risk of large, so-called “nuclear” verdicts that juries award in litigation.

A nuclear verdict refers to a jury award to a plaintiff that’s greater than $10 million. The term can also be used to describe any verdict higher than anticipated. The number of nuclear verdicts leveled against corporate defendants in the US rose 52% YoY in 2024, to 135, according to a 2025 report from public relations firm Marathon Strategies.

“Legal risks must be on all finance professionals’ radar,” Haile told CFO Brew in an email. “We live in a litigious world, and any accident—including one that might not even be your organization’s fault—can lead to crippling financial settlements and reputation damage that can jeopardize the organization’s future.”

Nuclear verdicts can also raise insurance premiums. The growth in nuclear verdicts is the primary culprit behind the phenomenon called “social inflation,” according to reinsurance company Swiss Re. Social inflation is the gap between the rate at which liability insurance claims rise and the rate of increase in “economic fundamentals” like consumer prices, wages, and medical costs.

Last summer, insurance broker and risk management firm Marsh noted a 9% quarterly uptick in US casualty insurance rates due to worsening frequency and severity of claims that were often linked to nuclear verdicts.

The costs of natural disasters, on the other hand, threaten insurers themselves. On a recent Travelers quarterly earnings call, as CFO Brew previously reported, CEO Alan Schnitzer warned that current trends of declining property insurance pricing could come back to bite insurance companies “as catastrophic events inevitably unfold.”