Marsh McLennan, in its role as an insurance consultant, is a strategic partner to businesses in the areas of risk management, strategic development and human capital. In this special project, we will tell how the company with over 150 years of history, which in 2025 celebrates 25 years in Bulgaria, applies global experience in the local context.

The world is in the biggest energy race since the Industrial Revolution. Wind farms are being built offshore, solar power plants are being deployed in deserts, and cables will be laid under the sea to carry electricity from the South Caucasus, across the Black Sea to Europe. At the same time, markets remain stressed, geopolitics – unpredictable, and the climate – increasingly extreme.

This is the landscape in which the energy sector operates today – ambitious, digitalized, but also loaded with enormous risks. If a decade ago, energy seemed like a slow, conservative industry, now it increasingly resembles a startup ecosystem. Artificial intelligence (AI) and the Industrial Internet of Things (IIoT) are entering turbines and transformers, sensors measure emissions in real time, and software optimizes production down to the last kilowatt-hour. In this reality, the development of energy technologies is key to the sector and how we will use energy more intelligently and efficiently.

“Traditional energy producers are required to run cleaner and more efficient operations, while continuing to meet shareholder demand and expectations. The future energy market will be a combination of nuclear power, hybrid projects from renewable energy sources such as solar and wind with energy storage systems, sustainable grid infrastructure, with a continuous progress in efficiency achieved through artificial intelligence, and cost optimization,” says Maya Yankova, Head of Corporate Business and Specialty Practice for Bulgaria, North Macedonia and Albania at the leading global insurance broker and risk consultant Marsh McLennan.

According to her, the key aspect of this transition will be the effective integration of these technologies through smart grids, as well as carbon capture and storage as a critical technology in the fight against climate change, allowing for the reduction of greenhouse gas emissions from industrial processes and electricity generation to create a more flexible and sustainable energy system.

In the field of energy storage, in addition to stand-alone energy storage projects, large-scale hybrid projects with collocated batteries will emerge, sufficient to stabilize entire regions or even national grids. Electric vehicles and home batteries will be able to act as connected mobile energy accumulators (virtual grid megabatteries and power plants). No less important is the integration of digital technologies for real-time monitoring and control. The energy future will also rely on the decentralization of energy systems, which will allow energy to be produced and used locally. Customers will increasingly rely on demand side management to direct the energy they consume themselves, which will optimize the entire energy system.

Hydrogen is poised for transformation and growth, with forecasts suggesting that global consumption could reach 200 million tonnes by 2030, driven by its potential to decarbonise various sectors including transport, industry and energy storage. The green hydrogen market is expected to jump from US$223 million in 2023 to US$419.3 million by 2028, as investors increasingly recognise its critical role in achieving net zero emissions.

Nuclear power will play an equally important role in the future. In 2023, twenty-two countries signed a declaration to triple the world’s nuclear capacity by 2050. This declaration is a key outcome of the COP28 meeting and recognizes the role of nuclear energy in reducing greenhouse gas emissions. Small modular nuclear reactors (SMRs) are emerging, promising safer, more flexible and faster nuclear power generation. Of course, there are challenges, including the disposal of nuclear waste and the potential for accidents.

Energy megaprojects such as the Black Sea Submarine Cable Project are also already part of the energy transition. This ambitious project aims to build parallel submarine power and fiber optic cables between Georgia and Romania and will be 1,195 km long, of which 1,100 km will be underwater. The cable will use HVDC technology with a voltage of 500 kV and a capacity of 1,000-1,500 MW, and an optical fiber cable will be laid along with it, which will improve internet connectivity between the Caucasus and the EU. The project is being implemented by Georgia, Azerbaijan, Romania and Hungary on the basis of the Strategic Partnership Agreement for the Development and Transmission of Green Energy, signed in September 2024. Bulgaria has started a procedure for joining the project in March 2025. The European Commission fully supports the initiative, including it among the five EU flagship energy projects for energy security and green transformation. Along this rapid development, digitalization is becoming a key to more efficient use of resources and addressing risks.

“Artificial intelligence has the potential to be a powerful tool for transforming the way energy is produced and managed. Through advanced machine learning and data analysis, artificial intelligence can optimize energy consumption and improve grid resilience, enabling more intelligent and efficient use of resources,” notes Maya Yankova.

The financial implications of using AI in energy are also impressive. Energy efficiency measures, for example, based on AI and smart grid technologies, could generate up to $1.3 trillion in economic value by 2030, according to the World Economic Forum.

An example of an application of AI is the oil and gas industry, where it helps optimize drilling operations by analyzing seismic and production data in real time. AI is also used for predictive maintenance of turbines, substations, and the electrical grid. In renewable energy, machine learning improves the forecasting of solar and wind power and allows operators to better balance supply and demand.

Insurers as partners in the energy transition

Rapid technological development brings with it ever-increasing risks. Cybersecurity in the energy sector is an ever-growing problem and is becoming more and more relevant. There is still a noticeable increase in awareness and the launch of targeted initiatives, but experts warn that despite the efforts, the actions taken may prove insufficient. The data confirms this. According to a report by the International Energy Agency (IEA), the number of cyberattacks against energy companies doubled in just two years – between 2020 and 2022. And according to a report by Statista , in 2024, energy is already the fourth most attacked industry in the world.

Behind the statistics are real stories. According to Reuters , Finland’s Fortum, for example, is one of the major utilities that is facing waves of coordinated attacks, including drone attacks and satellite link disruptions.

“At Marsh McLennan, we work with energy clients to assess cyber risks not only to prevent losses, but also to better structure insurance coverage to respond to these types of events,” says Maya Yankova.

Among the most common threats are phishing attacks, in which deceptive emails, websites or messages are used to gain access to passwords, sensitive information, including financial data. Malware is also widespread, through which cybercriminals disrupt operations, steal data or gain unauthorized access to management systems. Particularly dangerous are Advanced Persistent Threats APT, targeting industrial control systems and operational technology networks, capable of causing serious operational disruptions, including power outages.

Climate is a game changer

Extreme weather events are among the top risks that pose serious challenges to the energy sector. According to the World Economic Forum’s Global Risks Report, this risk is the second most likely in the short term, but the first ranked over a ten-year horizon. Climate change is making storms, droughts and heat waves more frequent and intense. For example, precipitation in Europe has increased by 22% over the past fifty years, which has increased the risk of flash floods. To deal with these risks, companies and governments need to be aware of the consequences so that adequate preventive measures can be taken. In this process, the insurance sector plays a key role through innovative solutions such as parametric insurance policies.

“Marsh McLennan has developed a three-stage approach to managing physical climate risks Marsh Physical Climate Risk Management , which includes a qualitative risk scanning, climate risk exposure assessment and climate resilience strategy,” says Yankova. Thus, the combination of identification, assessment and insurance tools helps businesses reduce losses and adapt to the new climate reality.

Nuclear projects under control

Nuclear energy, also among the clean energy technologies, continues to be of key importance for the energy of the future, relying on increasingly sophisticated and modern solutions. However, careful risk management is necessary for the successful development of nuclear projects.

“Marsh McLennan has an established specialized global practice for risk management and securing insurance solutions in nuclear energy, supporting investors, manufacturers and suppliers of nuclear products and technologies for more than five decades,” says Yankova.

The company’s team of 35 specialists includes 11 nuclear engineers with extensive experience in supporting nuclear companies and with in-depth knowledge of the international regulatory frameworks that underlie the associated risks. These professionals understand the complexities involved in the design, procurement, construction and maintenance of nuclear power plants and provide expert support for nuclear projects worldwide – the USA, the UK, Canada, Brazil, the Middle East, Egypt, China, Japan, the Netherlands, Belgium, Poland, Romania, Slovakia, Sweden, Spain, etc.

Money, politics and strategic risks

In new technologies, a key strategic risk is intellectual property rights. Another important aspect is credit risk coverage, which protects lenders in project financing against the failure of a borrower or counterparty to repay an amount due under insured financing.

Geopolitical tensions and demographic issues are also among the key forces influencing risk. Political risks are also not to be underestimated – from nationalizations or expropriation of assets to sudden regulatory changes, which can be compensated for through specialized insurance solutions.

It is now clear that the insurance sector is not just a “fire extinguisher” after an incident. Increasingly, it is a very important part of the project architecture – from risk modeling, through financing and construction to final operation. The portfolio of the leader among insurance consultants Marsh McLennan includes solutions for a large number of inherent and emerging risks:

• Operational risks – parametric solutions related to bad weather causing insufficient energy production or demand, delays in project start-up, risks in CO2 transportation and storage, trade credit risk against supplier default, contractors not performing or failing to perform their duties, cyber and terrorist attacks and many others.
• Technological risks – risks related to errors and omissions in the technologies used, management and integration of new technologies, technology performance guarantee, energy efficiency, extended warranties for electric cars, etc.
• Financial risks – political risks, risk of non-payment by the off-taker, transaction risk insurance from mergers and acquisitions or when a title is limited or not provided for a given asset, etc.
• Environment and Reputation – risks related to the environment and mandated restoration or remediation of environmental consequences, license and permit environamental bonds, waste management bonds, reputational damages.

The final bill

The energy transition is not just a technical exercise – it is a complex economic, political and technological game. Its success depends on the synchronicity between the innovation of engineers, the stability of regulations and the creativity of insurers.

A large part of the insurance solutions are already in the process of development, following the development of the industry itself.

“The main goal and task for us, the specialists from the insurance industry, is to create products and services that respond to the developing environment and new technologies,” Yankova summarizes.

For investors, lenders, contractors and operators, the choice is no longer whether to work with insurers, but how to involve them early in the process so that the project can become maximally effective, minimally risky and, above all, bankable. Because in a world where energy markets are interconnected, artificial intelligence manages production, storage and transportation capacities, technologies develop in months instead of years, geopolitical confrontation is at levels not seen in half a century, and the climate is changing before our eyes – the risks are global, but the solutions must be local, fast and well thought out. That is why Marsh McLennan is the world leader and trusted partner for its clients in providing solutions and structuring programs to manage these risks.

Source: Storio for Capital Weekly (an Economedia brand and product).