Geopolitical instability has overtaken supply chain disruption as the leading risk facing the global construction sector, according to Arch Insurance International's inaugural Construction Risk Report, published last week. For brokers placing construction risk, the findings point to a live conversation clients may not be initiating themselves: a meaningful share of firms are already restructuring how they handle risk in response to this shift, and not always by buying more cover.
The survey of 44 organisations operating within the global construction sector, conducted between April and May 2026, found that 59% of respondents named geopolitical instability among their top three concerns, ahead of supply chain disruption (52%) and weather and climate-related events (36%). Almost all respondents (85%) reported at least a moderate increase in overall risk exposure over the past 12 months, and none reported a decrease.
Within the geopolitical category, conflict or war and government policy changes were each identified as material threats by 53% of respondents, followed by trade restrictions (47%) and political unrest (44%). Larger organisations were more likely to flag geopolitical landscape, international supply chain disruption and government policy uncertainty, while smaller firms focused more on funding pressures, inflation and emerging construction techniques.
More than three-quarters of respondents (78%) reported increased volatility in material sourcing and procurement, while 75% cited greater volatility in the markets in which they operate. Nearly one-third (31%) said clients had reconsidered or relocated projects because of geopolitical concerns.
Stephen Convery, senior construction underwriter at Arch, said "its influence is being felt across the industry through inflationary pressures, procurement challenges and supply chain disruption."
That 31% figure is worth pausing on directly: clients are already changing where and how they build in response to geopolitical risk, which means the underlying exposure is shifting even where the insurance conversation hasn't caught up yet. For brokers, that's a concrete prompt to revisit political violence, trade credit, and delay-in-start-up cover with construction clients now, rather than waiting for a renewal to surface the gap, particularly for clients operating across multiple jurisdictions or reliant on imported materials subject to tariff volatility.
The other figure worth flagging is the 54% of respondents considering self-insuring a greater proportion of their risk. That's a genuine retention concern as much as a market-trend statistic: clients typically move toward self-insurance when they feel existing products don't address the specific risk keeping them up at night, and geopolitical instability, still a relatively new and fast-moving category for many construction insurers to price precisely, is a plausible candidate for that gap. Brokers who can demonstrate a product genuinely built around this risk, rather than a generic package extended to cover it, have a real opening to keep that business in the risk-transfer market rather than losing it to self-insurance.
Weather and climate risk also featured prominently, with 82% of respondents identifying flooding as the peril posing the greatest risk to their projects, well ahead of severe convective storms (49%) and heatwaves (36%). Some 77% reported increased exposure to weather and climate-related events over the past five years, and 67% said deductibles or self-insured retention levels had risen over the same period.
In addition, 91% of respondents agreed that skilled labour shortages were creating significant operational risk.
Separate reports published this year point to similar pressures. Aon's 2026 Global Construction Insurance and Surety Market Report found that macroeconomic uncertainty, geopolitical tensions and cyber risks continue to influence construction project delivery, loss exposure and insurer appetite across international construction portfolios. Swiss Re Institute's latest sigma report forecasts global non-life insurance premium growth of 0.6% in real terms in 2026, below its long-term average of 3.6%, reflecting competitive pricing, slowing economic momentum and elevated geopolitical uncertainty. A separate report by QBE and Control Risks found that escalating tariffs and international trade disputes significantly affect access to key construction materials, with steel, aluminium, timber and copper prices affected.
