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From crypto theft to AI regulation, this edition of Risk Wrap highlights six developments shaping compliance, governance, and insurance exposure across high‑risk industries.
North Korea Dominates Crypto Hacks in 2026, Exposing Systemic Risks in Cross-Chain Infrastructure
North Korea is responsible for 76% of all crypto hack losses from January – April 2026 ($577 million), which were incurred through only two attacks. Following these incidents, stolen funds were laundered through cross-chain infrastructure before ultimately reaching exchanges.
Hackers are focusing on high-value targets and are executing more sophisticated methods involving AI and social engineering, sometimes involving weeks of manipulation of complex blockchain mechanisms.
TRM Labs recommends that exchanges receiving BTC inflows from THORChain pools and other high-risk origins screens against known KelpDAO and Lazarus Group address clusters. Multi-hop analysis is advised rather than single-hop, which will not detect funds that passed through intermediary wallets before reaching exchanges.
Implications for brokers and their clients:
- Review whether cyber and crime coverage addresses large-scale, state-sponsored attacks.
- Consider crypto custody insurance to cover losses resulting from theft.
- Consider coverage for regulatory action related to failures in AML obligations.
Source: TRM Labs (April 30, 2026). North Korea Stole 76% of All Crypto Hack Value in 2026 — With Just Two Attacks.
Emerging insurance industries mentioned: Digital Asset and Web3 Insurance.
Lines of business mentioned: Cyber Liability Insurance, Digital Asset Crime Insurance.
Trade Secret Battles Surge in Biotech as M&A Activity Fuels Costly Litigation Risks
Trade secret disputes are becoming a growing exposure for medical device companies. Between 2020 and 2025, 802 federal lawsuits alleging trade secret misappropriation were filed across the biotech, pharmaceutical, and medical sectors, a 20% increase compared to the prior five-year period. Across the cases that were resolved in court, 87 permanent injunctions were issued and $650 million in damages were awarded.
Heightened M&A activity is a key driver. Failed transactions can trigger disputes where sellers allege that prospective buyers accessed sensitive information and later withdrew after benefiting from it.
To reduce exposure, companies can:
- Introduce buffers between third-party confidential information and engineering decision-makers.
- Ensure that the materials third parties consider to be trade secrets are clearly defined.
- Keep those materials isolated and prevent them from being disseminated internally.
- Reinforce employee awareness of confidentiality obligations when handling third-party materials.
Implications for brokers and their clients:
- Investigate IP liability insurance that covers defense costs and damages arising from allegations of trade secret misappropriation.
- Confirm whether D&O insurance policies will protect leadership against claims tied to M&A decisions and governance failures in handling confidential information.
- Consider obtaining biotech insurance that’s tailored to the sector’s distinct exposures.
Source: JD Supra (January 27, 2026). From Negotiation to Litigation: Limiting Trade Secret Liability When M&A Deals Fail.
Emerging insurance industries mentioned: Biotechnology Insurance.
Lines of business mentioned: Directors and Officers Liability Insurance.
Manufacturers Face Growing Exposure as AI Becomes Embedded in Operations
AI introduces new liability risks into the manufacturing sector. Key risk categories include:
- AI-driven operational liability: Algorithmic errors or system failures can disrupt operations and lead to financial loss.
- System integration risk: Operational and cybersecurity risks arise when deploying AI across manufacturing and IoT ecosystems, especially where legacy infrastructure is involved.
- Cybersecurity and data governance risk: This includes the risk of data breaches and weak oversight of AI-enabled systems, as well as risks associated with unauthorized “shadow AI” deployments.
- Regulatory exposure: Obligations are increasing under evolving legal frameworks like the EU AI act, which includes strict requirements for high-risk systems.
- IP challenges: Boundaries around the patentability of AI-assisted inventions can be unclear.
- Reputational and litigation risk: Growing expectations around ethical AI use may increase the likelihood of disputes or brand damage where standards are not met.
- Workforce considerations: It can be difficult to establish accountability when humans and AI collaborate or when processes are automated, increasing legal uncertainty.
Implications for brokers and their clients:
- Consider tech E&O insurance that covers liability arising from AI system failures, algorithmic errors, and integration issues that lead to financial loss.
- Review cyber liability policies to ensure adequate protection against AI-induced risks.
- Investigate bespoke AI insurance that’s designed to respond to the sector’s exposures including system failures, cyber threats, IP disputes, enforcement actions, and shareholder litigation.
Source: JD Supra (April 30, 2026). 2026 AI in Manufacturing & Supply Chain Series.
Emerging insurance industries mentioned: Artificial Intelligence Insurance.
Lines of business mentioned: Tech E&O Insurance, Cyber Liability Insurance.
Morocco’s Legal Cannabis Industry Expands Under Close Regulatory Scrutiny
2025 was a successful year for Morocco’s legal cannabis sector in terms of output and market development. Licensed producers expanded into additional export destinations and domestic cultivation continued to scale.
According to the National Agency for Cannabis Regulation, total dry cannabis production reached 19,576 quintals, up from 18,810 in 2024. The agency also issued 4174 new authorizations during the year, bringing the total number of licensed growers to 4776.
50 new food supplement products and one pharmaceutical drug were registered with the national medicine’s authority, bringing the total number of authorized cannabis products on the market to 141.
This expansion has been matched by firm regulatory enforcement. The agency carried out 7526 conformity checks throughout the year, resulting in the revocation of 111 licenses from 90 operators. In addition, enforcement actions were initiated against a further 85 operators and more than 1200 farmers over regulatory breaches.
Implications for brokers and their clients:
- Investigate product liability insurance to protect against claims linked to cannabis-derived supplements or pharmaceutical products.
- Review E&O insurance to confirm whether it covers errors relating to all compliance obligations applicable to cannabis companies.
- Consider obtaining bespoke cannabis insurance that’s tailored to the sector’s unique exposures.
Source: Hespress English (May 5, 2026). Legal cannabis in Morocco: Record harvests, new factories, and a push into Europe.
Emerging insurance industries mentioned: Cannabis Insurance.
Lines of business mentioned: Product Liability Insurance, Errors and Omissions Insurance.
US Crypto Bill Edges Forward After Key Deal on Stablecoin Rewards
A deal has been reached on a key provision of a proposed US crypto bill, potentially helping to move it forward in the Senate after earlier delays.
The legislation had stalled amid opposition from banks, which raised concerns that allowing stablecoin issuers and crypto firms to offer rewards could attract deposits away from traditional institutions and impact their lending capacity.
Major crypto firms like Coinbase contested that offering rewards is important for acquiring customers and preventing that would be anticompetitive.
Coinbase’s Chief Policy Officer, Faryar Shirzad, has been quoted as saying that “the banks were able to get more restrictions on rewards, but we protected what matters — the ability for Americans to earn rewards, based on real usage of crypto platforms and networks.”
Implications for brokers and their clients:
- Review whether existing D&O insurance policies will cover regulatory investigations and enforcement actions linked to stablecoin and rewards-related rules.
- Investigate fintech insurance that protects against the sector’s exposures amid regulatory changes.
- Investigate digital asset insurance that includes protection against risks relating to custody, cybersecurity, smart contract failures, and algorithmic stablecoin collapse.
Source: Reuters (May 4, 2026). Coinbase says deal reached on key provision of crypto bill.
Emerging insurance industries mentioned: Fintech Insurance, Digital Asset and Web3 Insurance.
Lines of business mentioned: Directors and Officers Liability Insurance.
US Treasury Guidance Puts AI Governance in Focus as Banks Face Readiness Gap
In a recent survey by Grant Thornton, only 18% of banking leaders said they were fully confident in their ability to pass an independent review of their AI controls in the following 90 days.
New guidance from the US Department of the Treasury will help financial institutions strengthen AI governance. The guidance spans several documents:
- AI Lexicon: This document clarifies the definitions of AI terminology based on industry standards and government resources. It focuses on terms that are used frequently and have a distinct meaning in the context of AI in financial services.
- Financial Services AI Risk Management Framework: This operationalizes the NIST’s AI Risk Management Framework in a way that’s tailored to financial services.
- Identity and authentication: Three documents under this category explain different attack sources (deepfake-driven social engineering, synthetic identity creation, and AI agents as attack surrogates). It provides a maturity model for controls to mitigate these attacks.
- AI and Explainability in Finance: This covers best practices for fulfilling explainability objectives as AI is developed and implemented.
- Data Nutrition Labeling: This discusses an approach for assessing data quality related to AI solutions used in finance.
- AI Enhanced Fraud: This document gives guidance on fraud education and awareness, incident response, and reporting.
Implications for brokers and their clients:
- Review cyber liability policies to confirm whether they explicitly cover AI-driven threats like deepfake fraud and synthetic identity attacks.
- Consider tech E&O coverage tailored for financial institutions and fintech firms that protect against failures in AI systems that may lead to vulnerabilities and losses.
- Consider directors and officers insurance to protect executives against allegations of AI governance failures, including risks tied to inadequate controls or lack of explainability.
Source: Grant Thornton (May 4, 2026). Treasury guidance brings urgency to AI governance for financial institutions.
Lines of business mentioned: Cyber Liability Insurance, Tech E&O Insurance, Directors and Officers Liability Insurance.
