Now in its fifth year, the 2026 UK Utilities Risk Report, produced by Utility Week in association with Marsh, highlights mounting concern among senior leaders as utilities grapple with intensifying cyber threats, regulatory upheaval and growing financial pressures across the sector.
For the fourth year in a row, the risk of a serious cybersecurity breach ranks as the number one concern, with its score stretching significantly ahead of all other risks. The report finds the cyber risk score now sits 2.5 points higher than the next-ranked threat, reflecting the increasing scale and sophistication of attacks linked to geopolitical tensions and digitalisation across utilities operations.
Regulatory uncertainty has also surged up the agenda, with policy and regulatory risks accounting for four of the top 10 overall risks. Concerns around the pace and clarity of policy development, as well as major structural reforms – particularly in the water sector – are creating significant uncertainty for long-term investment planning.
Carl Ratcliffe, utilities practice leader at Marsh, said the findings reflect the increasingly complex environment utilities are operating in: “The survey highlights what matters most to senior leaders as they strive to balance the demands of regulators and customers. The interconnected nature of risks underscores the critical need for resilience.
“Utilities have long been managing these risks, but the critical issue now is the accelerating pace at which they are evolving and the difficulty in keeping up operationally and from an investment standpoint.”
Sector divergence becomes more pronounced
While cyber and regulatory risks dominate overall, the report reveals clear divergence between subsectors. For energy networks, cybersecurity remains the top risk, but a notable new concern is the rise of political and public backlash against the cost of achieving net zero targets, which has climbed to second place. This marks a significant shift, having not featured in the top 10 previously, and reflects growing sensitivity around affordability and the pace of transition.
Networks also continue to highlight regulatory agility and policy clarity as critical issues, alongside supply chain disruption and extreme weather impacts on infrastructure.
In energy retail, the risk profile is dominated by financial and customer pressures. A collapse in customers’ ability to pay bills and rising debt levels rank second and third respectively, with total energy debt reaching £4.5 billion in 2025. Investment risks also feature heavily, with squeezed margins and regulatory constraints limiting returns and threatening the sector’s ability to fund innovation and net zero delivery.
Meanwhile, water companies face a distinct combination of regulatory, environmental and societal risks. Alongside cyber threats, regulatory reform uncertainty ranks highly, driven by proposals to overhaul the current system and introduce a single integrated regulator. Environmental risks are also intensifying, with extreme weather and, notably, water shortages entering the top 10, highlighting growing concerns over long-term supply resilience.
Affordability, misinformation and skills add further pressure
Beyond sector-specific risks, broader societal challenges are becoming increasingly operational. Rising customer debt, public resistance to net zero costs and widespread misinformation are all climbing the rankings, with nearly eight in 10 respondents flagging misinformation as a likely risk.
At the same time, workforce pressures are building. The report finds that less than half of respondents are confident in their ability to resource their organisations adequately over the next five years, reflecting growing competition for skills and supply chain constraints.
Overall, the 2026 report paints a picture of a sector under significant strain, balancing immediate operational challenges with long-term transformation. Cybersecurity, regulatory reform and affordability pressures are converging to create a more volatile risk environment, while differences between networks, retail and water highlight the need for more tailored responses across the industry.
As Ratcliffe says, the challenge now is not simply identifying risks but responding at pace: “Utilities must continue to strengthen resilience while navigating an increasingly uncertain and interconnected risk landscape.”
You can download the UK Utilities Risk Report 2026 here.