Masters of Risk | Season 4 Ep. 1: System Shock: AI, Misinformation, and the New Age of Fragility

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Stewart Webster   00:00:01

I'm Stewart Webster, your new host. Each month we'll challenge assumption unpack complex systems and explore the hidden forces driving credit, markets, energy and beyond. From boardroom decisions to geopolitical shocks, this is where risks meet insight. Grab your front row seat and lets get started. Welcome to Masters Risk Season 4 Episode 1. Today on Masters of Risk, we're joined by Michelle Sartain, President of Marsh to discuss the most pressing risks facing U.S. businesses as we move further into 2026. From persistent concerns about economic downturns to emerging challenges tied to artificial intelligence, misinformation, workforce well-being and supply chain fragility, U.S. business leaders are navigating a rapidly evolving risk environment. As President of Marsh U.S. and Canada, Michelle works closely with organizations confronting these uncertainties every day, helping leaders think about risk not just as a threat, but as something that can be anticipated, managed and mitigated. In this episode, we explore how U.S. business leaders are prioritizing risk today, where organizations are most exposed and what it will take to build resilience in an increasingly complex environment. Michelle, thank you for joining the podcast.

Michelle Sartain   00:01:45

Stewart, thank you for having me. I'm excited to be here.

Stewart Webster   00:01:48

I'm excited as well. And let's just dive into it. One of the most anticipated annual reports for global corporations is the World Economic Forum's Executive Opinion Survey, which Marsh supports as a strategic partner. When you look at the survey results for the United States, what stood out most to you about U.S. business leaders and how they're prioritizing risk into 2026?

Michelle Sartain   00:02:11

That's a great question to start the conversation with. I think probably the thing that stands out most is just the level of system-level fragility that business leaders are experiencing. The interconnected vulnerabilities that organizations face in today's environment really stands at the forefront. So when we talk about interconnected fragility, really, what I'm talking about is the interplay between economic, social, operational and political risks that really seem to come together -- and what organizations have to face in reality is that each one of those system-level fragility impacts the others. So you could have a social event that leads to an economic event. You could have an operational event that leads to a supply chain risk. That's really what I mean by that interconnected risk.

Stewart Webster   00:03:02

Absolutely. And when you started explaining that and articulating that thought, I started seeing the gears turning in my mind, right? And that's -- it seems like a well-oiled machine that's turning and the gears are turning and that's the economy essentially, right? These are all the different interconnected risks that you're talking about. One of the things I wanted to talk about, so from 2009 to 2020, the U.S. experienced its longest bull market in history, and that lasted about 11 years. And then that bull market was actually halted by the COVID shutdowns. -- but has since recovered since that period. And now U.S. markets are at all-time high again. But now executives are concerned that we're at the later stage of the business cycle. So the economic downturn has ranked as the top risk for U.S. leaders for 3 consecutive years. What is driving this sustained concern? And do you think the U.S. business community is bracing for a legitimate slowdown?

Michelle Sartain   00:03:54

I think that the issue is that there's just so much economic uncertainty that people are probably a little bit surprised that we haven't already had an economic downturn. But what business leaders, I think, are really adept at understanding is that they really need to be able to manage their financial cycles. So business leaders are taking a lot of preemptive steps to make sure that they are putting themselves in the best economic position so that they can weather some of those external shocks that seem to be coming toward them, right? So whether it's a supply chain risk that could lead to an economic downturn within their organization, a human capital risk, -- as COVID illustrated when our employees aren't able to work, it obviously can impact our businesses or if it's a geopolitical risk of which we've seen many different shocks to the system, all of which could potentially have an impact on our economy or on a business' performance.

Stewart Webster   00:04:46

Absolutely. And as you mentioned, it seems like we're almost due for a slowdown, right? I started my career in 2009, and there was almost 12 to 13 years of no recession, right? So as a millennial professional, I've never seen a recession until 2020, when that's kind of like what you're mentioning here. Another thing I saw from the survey results is a decline in health and well-being ranking high for U.S. leaders. What factors are contributing to this concern? And why is it becoming such a strong business and operational risk?

Michelle Sartain   00:05:18

Well, again, COVID really highlighted for business leaders just how important the health and well-being of their people are. And there has been the sense that there's just been declining personal health and well-being within the United States, whether that's a combination of personal issues or interconnected issues, things like chronic health issues, right? We hear constantly about just the declining health of the overall population, whether it is the issue of mental health, right, an issue that became very prevalent during COVID. And then also just the inequity that relates to ability to access necessary health care. All of those things have led to significant challenges in terms of making sure that you have a healthy and stable workforce because if your people can't come in, if there's a lot of absenteeism, inability to work, high levels of turnover, all of those can have dramatic impacts on an organization's ability to continue to grow and prosper.

Stewart Webster   00:06:17

Absolutely. And you're right, the health concern that can slow down the business. It can also slow down the economy as well. I've seen many economists relate our future GDP growth to the health outcomes of our citizens.

Michelle Sartain   00:06:30

Absolutely.

Stewart Webster   00:06:31

Now I kind of want to take a shift to media. Not that long ago, most information passed through a few trusted sources, whether it's newspapers or TV, for example. But today, social media has decentralized that process, and that change has kind of opened the door for misinformation to spread faster than ever. So we've handed everyone a megaphone, but we didn't hand out a rule book to go along with that megaphone. So now we're seeing misinformation and disinformation being recognized as a top risk for the first time. So how are U.S. companies preparing for the reputational risk, I guess, operational risk and societal implications of an increasingly distorted information environment?

Michelle Sartain   00:07:12

I mean this is such a hot area to think about and discuss. I mean, you mentioned that we gave people the tools, but we didn't give them the rule book. I don't know if we had given them a rule book if they would be following it anyway. But really, what we have, right, is we just have an information super highway that is at the fingertips of anybody who chooses to engage in it. So the issue of misinformation and disinformation is an issue at the forefront for many executives and obviously vastly important to the U.S. economy. We definitely seem to live in a post-truth world where people's access to information and reliable information is definitely harder to come by. The ability for there to be false claims about an organization's products, right, whether the efficacy or the harm caused by them, it's really very, very challenging for executives to get out in front of those types of situations. But that's why it's all the more necessary that they stand up cross-functional teams that include their communications team, their technology team, their cybersecurity team. Obviously, their executives, everybody needs to be on the forefront of managing what they see in the external environment so that they can make sure that they can respond to any misinformation that could potentially harm their business. It's also important to remember that misinformation can also have an impact on a company's supply chain. So it's not just that the information gets out there and it can cause a hard to the trust that the public has in a product, but it can also just impact the way that they have disruption in their procurement and ability to get what they need out of their supply chain. leaders need to just recognize that this is almost part of working and living in the world now. And so making sure that they have a plan and that they have this cross-functional team that's ready and able to respond is vitally important. They need to make sure that their communications teams are constantly evaluating what's going on and what's being said in the external environment. And the first viewpoint some of this can come from is actually from employees, right? Employees, you've got tens of thousands of employees who are out in the world. So their ability to recognize misinformation and bring it back to an organization is oftentimes the best first line of defense.

Stewart Webster   00:09:37

I like the phrase you used, information super highway. When I was in business school, they mentioned that the '80s and early '90s was the information era of our economy. So then we went to the big data era. And then now it seems like big data is antiquated. And now we're talking about artificial intelligence and AI. And now it seems like we're really in this era of information, the information super highway, like you mentioned. And it seems like 2025 was the year of artificial intelligence application. It seemed like it appeared briefly in 2024, but 2025 was really the year of AI adoption for the public. And it seems like you can't go anywhere without hearing the word AI or artificial intelligence. People are always mentioning it. There are many concerns about the labor market and how AI is affecting that or just people making means from AI. So U.S. leaders also identified adverse outcomes of AI technologies as a top risk. What types of AI-related exposures, biases, perhaps system failures, cyber amplification, regulatory uncertainty? What types of risk are you seeing most frequently in this space?

Michelle Sartain   00:10:42

Well, I think you're right. AI almost sounds cliche if it just wasn't such an important part of the world economy right now and what every individual is engaging with. It's important to remember that right now, as we sit here, AI in and of itself isn't a new risk, but it is an amplifier of existing risks. Obviously, because of its power, because of its ability to get information out there to exacerbate existing vulnerabilities, it is really important that business leaders pay attention to the risks that AI can amplify. Some of those risks, just to name a few, would be, as we've talked about, the ability to just amplify misinformation and disinformation. The potential for intellectual property infringement when AI is using copyright protected material to learn, right? That's a business risk that businesses need to be thoughtful about. the opportunity for it to create privacy violations or misuse data bias in the models, right? That's something that we talk about pretty regularly and making sure that we're staying on top of trying to prevent the models from having human bias in them. cybersecurity risk, as we've mentioned. And then again, the supply chain risk that can be exacerbated by AI. So all of these are different areas where AI has just amplified the risks that exist. But I think one of the challenges is that business leaders, while everybody is racing to adoption because none of us want to be left behind by a competitor figuring out how to use AI better, I think we probably have underestimated the future risks that AI can bring. And that's why starting to think about the risks that can be presented in these areas is really important for business leaders to start thinking about now as we're ramping up adoption in all different types of our personal lives as well as within the U.S. economy.

Stewart Webster   00:12:34

Now you just kind of identified and you laid out the types of risks that are associated with AI. As AI becomes more embedded in everyday business operations, do you think that U.S. companies fully understand the second order risk that you talked about, whether it's model drift, hallucinations, overreliance on automation, transparency challenges or cascading failures?

Michelle Sartain   00:12:54

I think they're probably pretty underrecognized at this point. In the race to adoption, I think the excitement maybe overshadows some of what those risks are. And it's really hard to foresee those risks because business models are changing daily as we speak. And so to understand how that change in the business model will lead to a future risk, it's really hard to do in real time, but it is really important that people stop and think about the risk that new AI models, the way that we're adopting AI and building it into our business workflows presents new risks to organizations. And so thinking about how to manage those risks, getting a cross-functional team together to really look at those risks and help analyze them is really at the forefront of what business leaders need to be thinking about so that they can make sure that they have a resilient organization as the AI and AI-enabled technologies really become part of our day-to-day in the business environment.

Stewart Webster   00:13:54

I really enjoy your perspective because I'm really seeing the enterprise risk management component of the organization, right? So how do we look top down and our workings of corporations and identifying this risk and how they affect the different departments. What I'm hearing from you is that we're no longer siloed, right? We're no longer siloed as a global economy, but then also our corporations are humongous. They're massive. And you're giving us that insight of how these -- the inner workings behind these organizations and the mechanics of organizations. Here's a topic that's a lot of people don't like to hear, and that's supply chain disruption. Supply chain disruptions are becoming increasingly prevalent in the global market. Because of the Russia-Ukraine war, we're seeing a disruption in energy, grain and fertilizer. In 2021, a single ship blocked the Suez Canal for 6 days, which blocked 12% of global trade. And COVID caused a semiconductor shortage in 2020, which crippled the U.S. auto industry. And that's just naming a few. There are many more that we could list over the past decade or so. Disruptions to a systemically important supply chain is one of the major risks cited by U.S. executives. Which supply chains are considered systemically important today? And why are they now viewed as more fragile?

Michelle Sartain   00:15:11

Such a good question. I think before AI was the overused term, I think supply chain was probably the overused term. The areas when we think about supply chain that are most critical are information and communication technology as a primary one, defense, which is what we saw around semiconductors and semiconductor shortages. Obviously, food, which we saw disruption with the Russia-Ukraine war, clean energy as well as rare earth minerals, right, essential minerals for basically everything that we build in the world today needs these rare earth minerals. Those are kind of the key areas when we think about supply chain and supply chain disruption. And one of the big issues that was really brought to life by COVID was just how fragile and interconnected our supply chains are and whether it is a physical event, right, like a ship blocking the Suez Canal or it's a geopolitical event like the Russia-Ukraine war, a cyber event, a climate event impacting a specific location where a key element is manufactured or workforce shortages, causing an inability for a manufacturing system to work. All of those are things that can impact the supply chains that the world relies on. Give you another example because we talked a lot about COVID as being a risk, right? And people are like, well, it's unlikely that there's going to be another pandemic anytime soon, which I think we're all very hopeful about. But in 2023, there was a Hurricane Helene, which caused flooding and temporarily closed a major IV fluid manufacturing facility in North Carolina. That one facility supplied 60% of the U.S. IV bags, creating a nationwide shortage that then forced hospitals to have to make decisions about which surgeries to have and whether they should go ahead and postpone elective surgeries. So something as localized as a hurricane hitting North Carolina can still have a pretty significant impact on a supply chain. So it's really important that organizations and businesses think about what is their supply chain and not just understanding their first and second-tier suppliers, but the suppliers of their suppliers. And having transparency into that supply chain is absolutely crucial. -- here at Marsh & Marsh McLennan, we recognize that as being one of the preeminent issues for businesses in the next decade and created a solution called Centris that allows organizations to have a view into their suppliers to hopefully create more resilient organizations by identifying potential areas of risk and helping manage around it because unfortunately, business leaders all know you can't manage what you can't see, but sometimes it's the things that we can't see that can be most impactful.

Stewart Webster   00:18:01

Again, as you articulate your thoughts, I'm seeing this web interconnectivity, right? One of the things you mentioned was food and agriculture. And what came to mind when you mentioned that, I was recently at a conference in Canada, and it was an energy conference, and they were talking about shortages. And there was a water scientist who talked about a shortage of water. And Ashu was saying that Canada is one of the only developed nations in the world that has enough water to supply its future or meet its future agricultural demands. So there's a ton of different risks that we're talking about here. And it seems like these risks are -- they're ever changing or they could be volatile. And looking at the U.S. risk rankings from 2023 to 2024 and 2025, the priorities shift significantly year-to-year. So what does this volatility tell us about how the U.S. risk landscape is evolving?

Michelle Sartain   00:18:54

Well, Stuart, first, I want to recommend that, that image of that web and the interconnectivity of the risk, the World Economic Forum Global Risk Report shows a really good web of exactly how these risks are tied together. And I really do think that, that's part of the point. Any one thing can cause a chain reaction into all of these other areas. But to your question, you're absolutely right. The risks change over time and business leaders' perceptions of those risks change. because the world has just become increasingly unpredictable. And so as the landscape evolves, the people's perception of risk also evolves. That year-to-year fluctuation of risk means that business executives need to remain agile and continue to reevaluate the risks that could potentially impact their people or their company. As you pointed out, there is no one risk that will dominate the next number of years. And so instead, organizations need to prepare for a broad spectrum of risks, and they need to be able to pivot when one risk either triggers another or becomes more systematically important to their organization or to the economy around them. So at the end of the day, really, what I'm saying here is businesses need to figure out how to establish a framework that creates resilience because you cannot plan for just one potential risk to be the one that you're going to respond to, you need to be able to have an organization that can respond to a multitude of risks and risks that then cause secondary risk to rise to the forefront.

Stewart Webster   00:20:30

So perhaps the most integral part or integral component of the insurance business, Marsh is the largest insurance brokerage in the world, perhaps the most integral component of that is preparing for uncertainty. And of course, this is a critical objective for many chief risk professionals I speak to on a daily basis. So I'd like to say we're certainly preparing for uncertainty. Across these top U.S. risk, you talked about economic downturns, health declines, misinformation, AI failures and supply chain fragility. Where do you see companies most prepared? And where do you see the biggest gaps?

Michelle Sartain   00:21:05

I think companies are most prepared when it comes to managing financial downside, right? There are many different levers that executives are familiar with that they can use to manage underlying financial risk. So I would say that's probably the area that businesses are most adept at managing. I think the areas that people are least adept for or prepared for would be those new and emerging risks. So the issue that we talked about around misinformation, AI failures, right? We don't know exactly how we're going to be using them in our businesses, let alone how we're going to mitigate any risks when we are using them in the failures that might result from that. And then as we were just talking about, right, the really fragile supply chains that businesses operate within. I think those are the areas where most companies need to spend time thinking about how they create that multidisciplinary resilience within their business. because as we've discussed, right, this interconnected web means that a failure in one could really cause a ripple effect and cause multiple different system failures that organizations need to be able to be prepared to respond to.

Stewart Webster   00:22:13

I definitely echo your thoughts there because as a financial analyst, the way I see risk is quantitatively, right? I see leverage ratios, decreasing revenue, decreasing earnings, these different ratios that drive the risk from a financial analysis perspective. But what you're saying is we need to think more from an evolve standpoint, right, more of an evolved perspective to risk and there are more qualitative components that you're talking about that exist now, right? So I guess when you look at all of these risks we spoke about today, as an S&P 500 company executive and President of a $90 billion business, what keeps you up at night as you think about the next year? Where do you believe U.S. business leaders are still underestimating the speed or scale of change?

Michelle Sartain   00:22:58

Well, I think you touched on it in your question, right? The first part is the pace of technological transformation. Day by day, we are learning new capabilities that these new technologies can enable us with. And while AI offers a tremendous amount of opportunity, it definitely also has some risks that we need to think about how we're best going to manage. The second would be the risk around misinformation. Every year, this risk seems to be amplified, and I see no slowing down in that risk. So increasingly, misinformation can impact consumer behavior, employee engagement and even regulatory environment, creating a complex web of challenges that organizations have to navigate. The third would be a decline in employee health and well-being. And again, that's not just a human resources issue, but it's a critical operational risk for most companies. The interconnected factors driving this decline from mental health to chronic conditions to workforce burnout really are accelerating and directly affecting productivity, talent retention, costs and operational risk. So all of those can be a drag on performance. And then finally, supply chain fragility remains a persistent vulnerability. While many companies have taken steps to build resilience into their supply chain, the scale of global disruptions and geopolitical tensions means that supply chain risks are evolving rapidly and require continuous adaptive strategies to remain on top of them. So those are the 4 things that keep me up at night. I'm sure that the -- I keep many executives up at night, but I do believe that with the right team of people around you, having a good framework and thinking about resilience, there's going to be a lot of great human ingenuity that will help companies weather some of these storms.

Stewart Webster   00:24:52

That was Michelle Sartain, President of Marsh U.S. and Canada, offering a clear and grounded perspective on the risks shaping the U.S. business environment as we move further into 2026. What stands out from this conversation is just how interconnected today's risks have become. Economic uncertainty, workforce health, artificial intelligence, misinformation and supply chains are no longer isolated challenges. They interact, amplify one another and require leaders to think more holistically about resilience. Michelle's insights remind us that managing risk today isn't about predicting the next crisis perfectly. It's about building organizations that can absorb shocks, adapt quickly and make informed decisions in the face of uncertainty. If you enjoy this episode, don't forget to like, share and leave a review. Thanks for listening to Masters of Risk, I'm Stewart Webster and we'll see you next time.