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Shadow AI spreads across healthcare, blockchain-based malware attacks surge 440%, and a $30 million space rescue mission ends in failure. This edition of Risk Wrap highlights six developments shaping compliance, governance, and insurance exposure across high-risk industries.
Blockchain Dead Drops Surge by 440%
Threat actors are increasingly using public blockchains to store instructions for malware, creating what Chainalysis calls Blockchain Dead Drops. Instead of relying on centralized servers that can be taken offline, this method allows attackers to embed malicious payloads in blockchain transactions or smart contracts, enabling compromised devices to retrieve them when needed.
This technique gives attackers’ campaigns longevity, as they’re immune to web2 defenses like domain seizure, hosting takedowns, and repository removal.
BDD development has also become more accessible. Since Chinese open-weight LLMs became available in 2025, BDD activity has increased by 440%. Most attacks have been launched by state-linked actors including groups associated
According to Chainalysis, restricting this activity at the protocol level is unlikely to be practical. Instead, they recommend monitoring outbound JSON-RPC calls to public blockchain endpoints as an early-warning mechanism for detecting activity associated with BDDs.
Implications for brokers and their clients:
- Organizations operating blockchain infrastructure should review cyber cover for attacks involving persistent on-chain malware infrastructure and assess whether incident response arrangements account for threats that cannot simply be removed or taken offline.
- Review crime covers for losses arising from unauthorized access, fraud, or other criminal activity facilitated by compromised systems using blockchain-based infrastructure.
- Investigate specialist digital asset and web3 insurance that reflects the operational and security risks associated with blockchain infrastructure.
Source: Chainalysis (September 17, 2026). DPRK and Iran are Leading a 5.2x Surge YoY in Blockchain-Assisted Cyberattacks.
Emerging insurance industries mentioned: Digital Asset and Web3 Insurance.
Lines of business mentioned: Cyber Liability Insurance, Crime Insurance.
Shadow AI Spreads Across Healthcare, Raising Liability Concerns
Shadow AI, the use of unapproved AI tools by employees, is widespread in healthcare, creating risks for both healthcare organizations and software providers.
In a survey by Wolters Kluwer Health in January 2026, around 500 healthcare professionals and administrators were surveyed. The results showed that 57% had encountered or used unauthorized AI tools at work and over 40% were aware that colleagues had used unauthorized AI.
The main motivations were:
- Faster workflows, according to 50% of administrators and 45% of providers.
- Better functionality and a lack of approved alternatives (40% of administrators and 27% of providers).
- Curiosity or experimentation (according to 26% of providers).
ECRI identified the misuse of AI chatbots as the top health technology hazard for 2026, superseding both cyber threats and surgical device failures.
For AI healthcare software providers, key exposures include:
- Patient safety: AI hallucinations could produce convincing but inaccurate information that influences decisions.
- Bias: AI outputs could disadvantage certain patient groups, creating equity-related liability exposures.
- Data security: Sensitive data may pass through systems with unknown security and retention practices.
Contracts between software vendors and healthcare organizations should clearly establish liability allocation, indemnification, and responsibilities around data use, security, and other critical factors.
Implications for brokers and their clients:
- Providers of healthcare AI systems may review technology E&O insurance to confirm whether it covers claims arising from errors, failures or omissions involving AI-enabled products and services.
- Review cyber cover for data breaches and other incidents resulting from employees or customers using unauthorized AI tools, including whether the policy responds when the breach originates from shadow AI use.
- Consider specialist Artificial Intelligence insurance designed to address emerging exposures around AI performance, bias, governance, and regulatory requirements.
Source: JD Supra (September 15, 2026). Shadow AI in Healthcare: Risks, Possibilities, and a Path Forward.
Emerging insurance industries mentioned: Artificial Intelligence Insurance.
Lines of business mentioned: Tech E&O and Cyber Liability Insurance.
$30 million Spacecraft Failure Ends NASA-Sponsored Mission Following Critical System Failures
Katalyst Space Technologies’ robotic spacecraft Link has re-entered Earth’s atmosphere after failing to rescue NASA’s Swift Observatory, bringing a $30 million mission to an end less than three months after launch.
Link was designed to move the telescope into a higher orbit, extending its operational life. After launching on July 3, the spacecraft suffered electronic failures that disabled two of its three reaction wheels. A faulty valve then caused Link to spin rapidly, which disrupted communications. Although engineers regained control, the spacecraft had insufficient fuel remaining to complete the mission.
Implications for brokers and their clients:
- Space operators may consider launch and in orbit insurance to cover potential losses occurring throughout both phases, including equipment failures that could end a mission prematurely.
- Review third-party liability coverage for damage or injury caused to third parties by spacecraft, including risks associated with controlled and uncontrolled re-entry.
- Investigate specialist space economy insurance tailored to the individual mission’s exposures.
Source: The Associated Press (September 25, 2026). Private spacecraft falls back to Earth after failing to rescue aging NASA telescope.
Emerging insurance industries mentioned: Space Economy Insurance.
Gene-Editing Firm Sues Over Alleged Theft of Trade Secrets
Beam Therapeutics has filed a lawsuit against Chinese biotech company YolTech Therapeutics and its US partner, Serapha Bio, claiming that confidential research belonging to Beam was used in the development of an experimental therapy.
Allegedly, a former Beam employee established YolTech before leaving Beam. The company claims that, after her departure, patent applications were submitted for YolTech drawing on information that had been obtained during her time at Beam.
Beam alleges that the employee accessed a large number of internal files, including technical material beyond the scope of her normal responsibilities. According to the complaint, some of the activity took place outside regular working hours.
Implications for brokers and their clients:
- Consider specialist IP coverage for the exposures associated with claims involving trade secrets, patents, and other proprietary research.
- Review D&O coverage for potential claims arising from allegations of inadequate oversight of IP.
- Consider specialist biotechnology insurance designed around the sector’s research, intellectual property, clinical development, and commercial risks.
Source: BIOPHARMADIVE (September 29, 2026). Beam sues 2 biotechs, alleging theft of base editing trade secrets.
Emerging insurance industries mentioned: Biotechnology Insurance.
Lines of business mentioned: Directors and Officers Liability Insurance.
Space Operator Faces Securities Class Action Over Misstatements About Satellite Readiness
York Space Systems Inc. is facing a securities class action lawsuit alleging that it made materially false or misleading statements about its satellite technology.
The claim states that onboard mission and payload software wasn’t completely functional before launch and that debugging was still taking place in-orbit to avoid missing the launch deadline. After reports about the satellites’ incomplete software were released, the firm’s stock price fell significantly. In addition, YSS is also alleged to have taken shortcuts in testing, which investors were also not informed about.
An attorney involved with the case, Joseph E. Levi, Esq., said that the complaint “raises serious questions about whether investors received accurate information about the readiness of York’s flight and payload software before these spacecraft ever left the ground” and that “public filings described proven, scalable technology while, as alleged, mission-critical code was still being completed on orbit.”
Implications for brokers and their clients:
- Space operators may consider space insurance tailored to the specific technology, mission profile, and contractual exposures of individual satellite programs.
- Review D&O coverage for potential claims alleging that investors were given incomplete or misleading information about technology readiness, contractual performance, or operational risks.
- Consider tech E&O coverage for claims arising from failures or defects in mission-critical software and other technology used in satellite systems.
Source: GlobeNewswire (September 28, 2026). YSS Shareholder Alert: York Space Systems Inc. Securities Class Action Lawsuit – Investors With Losses May Contact Levi & Korsinsky.
Emerging insurance industries mentioned: Space Economy Insurance.
Lines of business mentioned: Tech E&O Insurance, Directors and Officers Liability Insurance.
Australian Gambling Operator Hit With $1.07 Million Penalty Over Self-Exclusion Breaches
Dabble Sports Pty Ltd has been fined AU$1,069,200 after an investigation by the Australian Communications and Media Authority found that it failed to comply with self-exclusion requirements.
Dabble failed to close 157 customer accounts after their owners registered with BetStop, Australia’s National Self-Exclusion Register. It also sent 839 messages across SMS, emails, and push notifications to 165 people who had excluded themselves from gambling.
Under Australia’s self-exclusion rules, gambling providers must close the accounts of users registered with BetStop as soon as is feasible and must stop sending them marketing messages.
Dabble has entered into a two-year court-enforceable undertaking requiring an independent review of its compliance systems.
Penalties for self-exclusion breaches in Australia are also due to increase substantially when new laws take effect on January 1, 2027.
Implications for brokers and their clients:
- Consider E&O coverage for claims arising from failures in account management, self-exclusion, or marketing systems that result in customer losses or regulatory action.
- Review D&O coverage for potential claims against executives following allegations of inadequate oversight of regulatory compliance and customer protection protocols.
- Investigate specialist gambling insurance for coverage of regulatory investigations, player liability, payment fraud, and other sector-specific exposures.
Source: Australia Communications and Media Authority (September 16, 2026). Dabble pays $1m penalty for gambling self-exclusion breaches.
Emerging insurance industries mentioned: Gambling Insurance.
Lines of business mentioned: Directors and Officers Liability Insurance, Errors and Omissions Insurance.
