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Embracing volatility in the energy and power sector: Four key opportunities

Energy firms must embrace volatility via talent, long-term risk plans, strategic premium spend, strong industry ties, and diversified risk strategies.

12/22/2025 · 6 minute read

Today’s energy companies face uniquely complex risks amid soaring demand for power infrastructure, including fluctuating commodity pricing, geopolitical shifts, extreme weather events, and rapid technological innovation. Beyond the immediate challenges of developing and financing new projects, organizations must strategically manage assets whose lifecycles span decades, demanding foresight and adaptability at every stage.

The industry’s significant scale and premium spend — amounting to $2.4 billion last year in the US alone, according to Marsh data — highlights the immense value and risk embedded in energy infrastructure, from extensive oil and gas networks to innovative renewables projects. In this high-stakes environment, the balance of risk and reward is profound.

For C-suite executives, risk managers, and other key stakeholders, success depends on identifying the most critical risks and harnessing the levers within your organization’s control. Today, resilience and agility are inseparable: thriving means knowing when to pivot decisively to maintain a competitive edge in a fast-evolving energy landscape.

Addressing the talent challenge: A critical risk factor

According to a recent study by Kearney and the IEEE Power & Energy Society, the world will need between 450,000 and 1.5 million more power engineers by 2030 to design, implement, and operate new power infrastructure that is required to meet growing demand.

Without qualified workers at the helm, the energy and power industry cannot execute on its ambitious objectives, including achieving a smooth energy transition and accommodating greater production capacity. Addressing the talent gap must be a top priority, with potential strategies including:

  • Implementing competitive incentives and career pathways to attract and retain top talent, particularly recent graduates entering the workforce
  • Investing in comprehensive, industry-aligned training and development programs to equip current and future engineers with relevant skills and upskilling opportunities
  • Cultivating a strong organizational culture focused on safety, innovation, and operational excellence to empower and engage employees at all levels

Navigating market dynamics

Securing a skilled workforce is vital for driving innovation and operational excellence, but equally critical is the ability to anticipate and adapt to rapidly shifting market conditions to sustain growth and mitigate risk.

Many energy companies have opted to retain substantial risk through risk management solutions such as captives and mutuals — a cost-effective strategy that can, however, limit the capital available in the commercial insurance market. This has intensified commercial capacity shortages, particularly in key coverages such as excess liability coverage, exposing organizations to heightened vulnerabilities when external capital becomes essential. Furthermore, companies lacking strong, long-term relationships with commercial insurers risk being sidelined during market capacity crunches.

Four key opportunities for energy and power leaders

While the energy sector faces significant challenges, market volatility also creates distinct opportunities for organizations that prioritize resilience and flexibility. In the near term, below are four key actions executives and risk managers at energy and power companies like yours can take to better position your organization for resilience:

Managing risk through isolated, short-term insurance renewals exposes your organization to unnecessary volatility and missed strategic opportunities. Instead, it is essential to anchor your risk management approach in a multi-year vision that reflects the long asset lifecycles typical of energy projects. Key conversation starters may include: 

  • Where do you want to be in the next ten years? 
  • What concrete steps will be necessary in the next five years to get there? 
  • Where do you excel in managing risk and how should that impact your risk financing strategies?

Building and maintaining a strong relationship with your broker is critical, as they provide valuable market insights, strategic advice, and tailored solutions that support your long-term risk management goals.

It is important that your long-term plan is a living strategy. Regularly revisit and adjust it to keep pace with evolving market conditions, technological advances, and regulatory changes. C-suite executives must champion this mindset of prioritizing risk management, using their influence to embed resilience and stability into the risk culture and decision-making process.

Premium spend from the energy sector into the commercial market is particularly substantial relative to other industries, making it critical to manage insurance-related investments strategically throughout the year — not just at renewal. It is important to continuously evaluate your premium allocation and the value derived from your insurance programs over time.

This means assessing the amount of risk that is transferred to the commercial market aligns with your evolving risk profile, operational priorities, and market conditions. By doing so, you can identify opportunities to enhance coverage, reduce unnecessary costs, and enhance risk transfer efficiency. More specifically, an effective premium allocation strategy can help appropriately distribute the cost of risk so management has a clear valuation of each asset. Strategic premium management can also support improved budgeting and capital planning, enabling your organization to respond nimbly to market shifts and emerging risks while reducing volatility associated with insurance strategies.

Ultimately, a year-round, value-focused premium strategy empowers your organization to maximize the impact of every dollar spent, strengthening financial resilience and competitive positioning in a volatile environment.

In a market characterized by capacity constraints and cyclical shifts, cultivating and sustaining strong, trust-based relationships with insurers, investors, and industry collaborators is essential. These relationships can provide critical access to capital, specialized expertise, and collaborative problem-solving during times of transition and disruption.

Part of doing so effectively is through transparent communication and alignment of long-term objectives to build resilience and agility. When properly aligned, these relationships can help your organization absorb shocks more effectively, learn from disruptions, and pivot proactively.

A diversified risk approach can help your organization avoid overreliance on any single risk financing vehicle and keep building strong, collaborative relationships with commercial insurers, helping you make use of your strategic leverage to negotiate more favorable terms.

This means balancing risk retention and transfer across a diversified portfolio of vehicles — including captives, industry mutuals, and commercial insurance markets — to enhance capital access and cost efficiency.

Transforming uncertainty into opportunity

The energy and power sector’s unique risk landscape demands a sophisticated, strategic approach to risk management. By enhancing your talent strategy, monitoring market dynamics, embracing long-term risk planning, and balancing risk retention and transfer with meaningful relationship-building, your organization can transform volatility into a competitive advantage. 

To learn more, speak with a Marsh representative.

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Joe Meaney

Joe Meaney

US E&P Specialty Products Leader

  • United States

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