The Capacity to Act: Supporting European businesses in an era of interconnected risk

For decades, European competitiveness has been built on openness, integrated markets and increasingly interconnected infrastructure. Those foundations remain essential. But geopolitical tension, climate volatility, artificial intelligence and the energy transition have changed how risk emerges and propagates. The challenge is not to reduce interconnectedness. It is ensuring organisations can keep making informed decisions when the systems they depend on come under pressure. Kai Kuklinski and Julien Guénot discuss why governing interconnectedness has become one of the continent’s defining challenges, and why preserving the capacity to act is becoming the ultimate measure of resilience.

Europe has long benefited from interconnected markets. What has changed—and why can disruption now spread so quickly?

Kai Kuklinski: Interconnectedness has been one of Europe’s greatest competitive advantages. Integrated supply chains, shared energy markets and open trade let European businesses innovate, specialise and compete globally.

What has changed isn’t interconnectedness itself, but the speed at which disruption now propagates through it. Take the Red Sea shipping crisis, for instance: vessels were forced to divert from planned routes, extending transit times, disrupting production schedules and increasing freight costs. The effects quickly spread beyond shipping into supply chains, inventories and prices across industries. Local events no longer stay local.

Julien Guénot: Exactly. But I’d go further on what this means in practice. For years we described the global economy as interconnected. Today we should describe it as propagating: energy affects digital infrastructure, digital infrastructure supports finance, AI depends on electricity, maritime logistics shape industrial production.

The question is no longer whether an organisation is interconnected. Every organisation already is. It’s whether it understands how disruption moves through those connections once it starts. That’s a mapping exercise many boards are only beginning to undertake.

Why has critical infrastructure moved from an operational concern to a strategic priority for boards?

Kai Kuklinski: Infrastructure no longer simply supports business activity; it increasingly determines where companies can operate, scale and compete.

AI makes this obvious: it’s as much an infrastructure revolution as a technological one. Without resilient grids, secure connectivity and high-capacity data centres, AI cannot scale. The energy transition tells a similar story. Nearly half of Europe’s electricity now comes from renewables, which makes network resilience and storage as strategically important as generation itself. The IEA estimates annual investment in electricity networks needs to increase by around 50% before 2030 just to accommodate electrification and digitalisation. Europe’s future competitiveness will depend as much on the quality of its infrastructure as on the productivity of its businesses.

Julien Guénot: Agreed. But infrastructure is only half the story. It enables value creation; governance determines whether that value can be sustained when critical systems come under pressure. That’s why boards now discuss grids, cloud providers, ports and subsea cables not simply as operational assets, but as questions of capital allocation, continuity and risk appetite. Infrastructure was once viewed as the backbone of the economy. Today, it’s its nervous system.

What does governing interconnectedness mean in practice, and does it have to come at the expense of efficiency?

Julien Guénot: It means organisations can no longer optimise assets’ individual functions without considering how they depend on one another. A cyberattack, extreme weather event or damaged subsea cable rarely remains confined to one system; it can quickly become an operational, economic and geopolitical issue. Governing interconnectedness means understanding how disruption can move across the organisation—and where it could have the greatest impact.

The goal isn’t to eliminate dependency. That’s neither realistic nor desirable. It’s to recognise where dependency becomes vulnerability, and decide where redundancy, diversification or other forms of optionality are justified—even when they appear less efficient in the short term. Interconnectedness becomes fragility when organisations fail to make those choices deliberately.

Kai Kuklinski: Many organisations understand the principle, but acting on it is more difficult. There is a genuine trade-off that boards do not always make explicit: redundancy, diversification and optionality cost money. Building resilience may mean accepting some additional cost in normal conditions to reduce the impact of disruption when it occurs. The key is not to add redundancy everywhere, but to invest selectively where a failure would most constrain the organisation’s ability to act.

What’s changed is that the cost of prioritising short-term efficiency alone is becoming more visible. Repeated disruption to maritime routes shows that resilience can be a source of competitive advantage. Tomorrow’s strongest organisations will combine efficiency with the flexibility to adapt, maintain continuity and continue innovating under pressure.

How does governing interconnectedness change the meaning of strategic sovereignty?

Julien Guénot: Sovereignty is often misread as eliminating dependencies, or as self-sufficiency. Europe has always prospered through openness. The challenge is to ensure that openness never becomes paralysis and that organisations retain meaningful choices when circumstances change. Increasingly, I define sovereignty as exactly that: the capacity to act.

Kai Kuklinski: Which is why governance has become one of Europe’s most strategic capabilities. Ownership, investment and infrastructure matter. But governance determines whether organisations retain the flexibility to make informed decisions under pressure. Strategic sovereignty depends less on controlling every critical resource than on preserving credible alternatives and the freedom to act despite dependence.

How can clients preserve their capacity to act and what role can insurers play?

Kai Kuklinski: Our clients don’t view risk as isolated, static exposures; they understand how their exposures interact and could affect their strategic objectives. They need to use data-driven insights to assess and mitigate risks and prevention measures in conjunction with loss and business scenarios.

Julien Guénot: That changes our role. Protecting assets remains essential, but clients increasingly need us to connect disciplines that were once managed separately: risk consulting, underwriting and climate analytics working from a shared view of their exposures—not three different reports. Organisations rarely lose resilience because of one isolated event. They lose it when several dependencies fail at once.

Consider a manufacturer that relies on a single cloud provider to run its operations. Flooding at a key data centre triggers a major outage that doesn't just take down internal systems — it simultaneously disrupts order management, halts communication with suppliers and prevents access to the financial platforms needed to authorise emergency procurement. No single failure caused the crisis; it was the shared dependency on one critical system that turned a localised weather event into an operational standstill.

Helping clients preserve their capacity to act means understanding those connections before disruption occurs, not after. That is the principle behind how we combine engineering expertise, global underwriting and risk intelligence.