Horizon 2026: Preparing for a World in Motion

31 March 2026

Gallagher’s third annual virtual Horizon conference examined what AI, geopolitical shifts and energy transitions mean for public sector institutions.

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Few structural forces have shaped UK public sector budgets, services, risk and governance as profoundly as the ones unfolding today. Generative AI, structural reorganisation and a collaborative mindset are driving innovation, while interconnected risks such as climate volatilities, geopolitics and supply chain frictions are creating operational pressures.

In this climate of change, public sector organisations are no longer asking whether they should readjust their frameworks, but rather if the pace and depth of their adaptation is sufficient to protect value, navigate scrutiny and build resilient futures.

The Horizon 2026 conference brought together risk advisers, sector specialists and public sector leaders to examine this conundrum: the forces of redefinition, and how institutions can prepare for what's next.

Key insights

Organisations that reimagine workflows with AI, rather than applying it incrementally, will achieve exponential gains
Unified, high-quality data is critical for merging councils and housing associations to tell credible stories to insurers
Climate change and energy transition pressures are reshaping housing priorities, requiring innovative financing models and a focus on social equity
Systemic volatility, including geopolitical tensions, climate risks and cyber threats, demands that public sector organisations treat cybersecurity as a strategic priority

Across the ten sessions discussing changes, challenges and chances, the overall picture that emerged was one of genuine opportunities: moving risk resilience towards long-term strength, rather than reacting only to today's pressures. This report draws on the key themes to offer a practical, forward-facing view of the landscape ahead and what organisations can do to become risk ready.

The top 5 macrotrends reshaping the UK public sector

Serving nearly 69 million people, the UK public sector was built for a stable and predictable environment. However, the current era of polycrisis is reshaping its operating reality. Understanding their implications is the foundation of risk readiness.

1. Managing indirect, interconnected risks in a volatile world

For UK public sector organisations, the consequences of international events, such as energy price volatility, supply chain disruption and inflationary pressure, can arrive quickly. These factors have a significant operational impact and increased demand on public services. In many cases, the ripple effects extend further — interruptions to critical infrastructure that can escalate into business continuity challenges, putting additional strain on public systems.

The UK's position as a heavily import-dependent economy means that disruptions to international trade routes, energy supply or global technology markets can create direct pressure on budgets, service delivery and communities. This interconnectedness reinforces the need for leaders to view external shocks not as isolated events but as potential triggers for wider operational disruption.

The implication for leaders is to ensure that strategic planning and risk registers account for indirect exposure. It is also important that continuity plans are assessed against real-life scenarios. Regular exercises that simulate disruptions to supply chains, energy networks or key digital systems allow teams to rehearse decision‑making under pressure and identify any weak points in advance.

2. Energy transition: From obligation to competitive advantage

The shift to renewable energy is one of the most significant strategic opportunities available to public sector organisations right now.

For early adopters, renewable infrastructure becomes a competitive advantage: it reduces long‑term operating costs, strengthens energy independence and positions organisations to attract investment, partnerships and talent aligned with sustainability goals.

Local authorities, housing providers and public institutions that invest in solar, wind, district heat networks, battery storage and EV infrastructure are not simply meeting net zero obligations. They're building long-term cost resilience by improving community health and generating economic activity through green employment.

But the path forward requires careful navigation. Upfront capital, planning complexity, grid constraints and the need for specialist expertise are all genuine considerations.

3. Social housing: Turning climate risk into community resilience

Rising climate impacts, including overheating, flooding and storm risk, are colliding with a sustained cost-of-living crisis, tighter safety and carbon regulations and a persistent housing shortage. These factors are particularly acute for vulnerable tenants, where poor housing quality drives worsening health outcomes and higher demand for local public services.

Amid these pressures, climate-resilient placemaking that blends green, blue and grey infrastructure can cool urban heat islands, manage water and strengthen social cohesion. Whole‑life carbon approaches and smart retrofit, integrating fabric measures, solar PV, batteries and heat networks, can reduce bills and emissions.

The implication for leaders is to hard‑wire these trends into strategy:

Prioritise a customer-centred "homes and place" framework for capital allocation
Triage assets to invest, regenerate or divest while protecting mixed tenures
Stress‑test continuity plans against extreme heat, flood and energy shocks

4. Financial sustainability: Collaboration as a strategic lever

Across higher education, social housing and local government, the financial pressures facing public institutions have deepened.

Nearly half of all higher education institutions are projected to report a deficit in 2026, according to Office for Students (OfS)¹. Housing providers are managing the simultaneous demands of building safety investment, decarbonisation and tenant need. Local authorities are delivering more statutory services with fewer resources than ever before.

In this environment, collaboration is emerging as a strategic measure. Mergers, federated models, shared service arrangements and strategic alliances offer real opportunities to reduce cost, build capacity and create sustainable platforms for the future. The institutions approaching this with clarity of purpose, strong governance and a realistic view of cultural alignment are finding it transformative.

5. Evolving public expectations: Balancing technology and human connection

Public bodies are entering a period where advanced technologies including AI, can significantly elevate service delivery. When applied effectively, they enable earlier diagnosis in healthcare, smarter triage across frontline services and real‑time optimisation of critical infrastructure such as traffic and emissions. These capabilities unlock opportunities to intervene sooner and improve outcomes at scale.

At the same time, technological prowess introduces new considerations. Automation can ease routine workloads, yet it also brings more complex cyber risks. Moreover, an ever-connected digital sphere enables faster‑moving misinformation and rising expectations shaped by private sector experiences. This makes it increasingly important to have clear governance, supportive workforce practices and transparent communication to sustain public confidence.

The opportunity lies in aligning innovation with human strengths. Technology works best when it creates space for judgement, empathy and relationship‑based support. The resilience of UK communities will depend on how effectively public institutions can deliver fair, inclusive services.

Public sector: Preparing for success

In an age of constant change, you need to create conditions for purposeful, responsible use of new technologies. As the public sector navigates mergers, leadership transitions, shifting trade dynamics and evolving tools, supporting the workforce shift from merely adopting solutions to adapting how they work is key to unlocking real value.

Readiness to technology also involves anticipating and preparing for ripple effects. As digital capabilities scale, interdependence across data, governance and security become more intricate. Simplifying processes where possible, clarifying responsibilities and building governance and cyber security safeguards can help organisations to reduce friction, strengthen trust and create the foundations for long term digital resiliency.

Embedding risk management into transformation initiatives is equally important. Organisations should work to integrate risk functions within programme offices rather than operating externally. Real-time risk tracking, scenario modelling and resilience planning can all be effective as part of an organisation's risk management strategy, particularly when an organisation's identity and structure are evolving simultaneously.

To close the "reimagination gap" and avoid change fatigue within the workforce, organisations can invest in role-relevant upskilling. Employers need to make change feel smaller by breaking it into simple steps and giving people permission to experiment. Celebrating early wins will help reduce fear of being left behind and show how the right technology frees time for higher-value work. This shift highlights that cognitive and humanities skills like asking probing questions or collaborating across functions are often the true superpower in a transformed workplace.

Whether the aim is to reduce congestion, improve housing quality or enhance citizen satisfaction, organisations must define specific outcomes. These objectives enable smarter insurance structuring and stronger alignment with stakeholders, ensuring that efforts are both targeted and impactful.

Fostering strategic partnerships is also essential for meaningful agility. Collaboration with technology providers, risk advisers, insurers and private sector partners can unlock valuable expertise and global best practices.

Signals from Horizon 2026: A guide for a resilient future

Operational continuity: The new baseline

Signal: Operational continuity: The new baseline
Driving factors: Digital disruptions now last weeks, making extended business interruption a realistic planning assumption.
How can you prepare:
- Map critical services to their digital dependencies
- Build and resource analogue fallbacks
- Evaluate through full-scale continuity exercises
Question to ask: How would we deliver our most critical services if core systems were unavailable for 30 days?

Data quality: A robust measure of credibility

Signal: Data quality: A robust measure of credibility
Driving factors: Frequent reorganisations risk fragmenting data and knowledge, creating vulnerabilities that undermine confidence and insurability.
How can you prepare:
- Treat data harmonisation as a priority
- Integrate risk frameworks and data governance to ensure the data story is consistent
Question to ask: Could we evidence our risk position today with clean, integrated data?

Start the collaboration conversation early — with the right partners

Signal: Start the collaboration conversation early — with the right partners
Driving factors: With increasing financial pressures affecting higher education, risk financing becomes an essential step for resilience.
How can you prepare:
- Early exploration of advisory and partnership options strengthens strategic optionality
- This ensures due diligence alignment, indemnity certainty and regulatory compliance
Question to ask: To what extent are we shaping our strategic options early, so we are not later constrained by financial pressures beyond our control?

Climate volatility is now an infrastructure stress test

Signal: Climate volatility is now an infrastructure stress test
Driving factors: More frequent extreme weather events and rising heat stress are increasing the cost and complexity of maintaining public sector infrastructure.
How can you prepare:
- Conduct climate-adjusted asset assessments
- Prioritise investment in climate-resilient design
- Integrate insurance strategy early in capital planning
- Stress-test critical estates for heat, flood and continuity impacts
Question to ask: Have we assessed how climate stress events would impact our critical assets?

AI-driven misinformation: A silent reputational risk

Signal: AI-driven misinformation: A silent reputational risk
Driving factors: Rapid advances in generative AI are lowering the cost and increasing the volume of misleading or manipulative content. Institutions, communities and public trust are the targets.
How can you prepare:
- Establish AI governance and content verification protocols
- Train frontline teams to recognise synthetic content
- Strengthen community relationships to build trust capital that can withstand information shocks
Question to ask: How prepared are we to detect, respond to and communicate through an AI-driven misinformation incident?

The resilience playbook: Act now to plan ahead

AI and risk management are strategic tools, and leadership should model responsible use of technology and early engagement in risk discussions.

For the public sector, realising the full value of AI and other future technologies comes by reimagining workflows and designing long‑term strategies that link sustainability with affordability and future‑ready infrastructure. In a fast‑shifting landscape, continuous adaptation and a commitment to learning are the hallmarks of resilience and long-term success.

Test now

Audit your business continuity plans for digital disruptions, energy price volatility, international supply chain risks.
Engage risk specialists to identify and scope opportunities and hidden risks.

Plan for the next 12-24 months

Develop and refresh AI governance framework for responsible adoption.
Explore collaboration options with objectivity and openness.
Integrate risk and insurance strategy into capital programme planning cycles.
Build geopolitical and macroeconomic scenario planning into strategic risk processes.

Watch and adapt over the longer term

Build the habit of horizon scanning — regularly revisit your strategic risk picture.
Stay close to expert advisers and maintain organisational agility to respond when the landscape shifts.

Looking ahead: Turning disruption into opportunity

The picture that emerges from Horizon 2026 is one of real and significant change in which well-prepared, forward-thinking organisations can build on and gain a competitive advantage.

As Nick Harris, CEO of UK & Ireland Retail Broking at Gallagher, notes, this new viewpoint opens up unique opportunities around risk readiness and resilience. This is especially true for public organisations aiming to shape their trajectory.

In a world in constant motion, those that plan proactively and build strong partnerships simply create more room for better outcomes.

In a time of major structural change, telling a clear and credible story to the market has never mattered more. Getting ahead of risk today means understanding your risks clearly and partnering with the right support to build the resilience that carries you confidently into the future.

Nick Harris, CEO, UK & Ireland Retail Broking, Gallagher

Sources

¹ "Significant challenges continue to face higher education finances — with nearly half facing deficits in 2025-26," Office for Students, 26 Nov 2025

Disclaimer

The sole purpose of this article is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.

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