This Q&A was first published in Financier Worldwide as part of a broader roundtable.

In today’s M&A environment, transactional risk management requires more than simply transferring risk through insurance. Rising claims activity, emerging technologies, evolving regulatory requirements, and heightened scrutiny around diligence are reshaping how deals are evaluated, structured, and executed. In this Q&A, Brett Burgan, Partner and M&A Insurance Advisory Leader at CohnReznick Advisory LLC, shares his perspective on the changing risk landscape, the growing strategic role of representations and warranties (R&W) insurance, and the practical steps buyers, sellers, insurers, and advisers can take to execute transactions with greater confidence.

Q: What does “good” transactional risk management look like today compared to five years ago?

Brett Burgan:
The fundamentals have not changed. Good transactional risk management begins with thorough diligence, a clear understanding of the economics of the transaction, and careful drafting of the purchase agreement. Working capital, purchase price adjustments, earn-outs, indemnification provisions, and disclosures remain frequent sources of disagreement when not addressed with precision.

What has evolved is our ability to apply lessons from completed transactions, post-closing disputes, and insurance claims. We have a clearer understanding of how accounting judgments, aggressive projections, customer concentration, carve-out complexities, and undisclosed liabilities can affect value after closing. Strong deal teams use that experience before signing. They identify the assumptions that matter most to valuation, assess whether they are supported, and document how identified risks were addressed. Technology may improve efficiency, but it does not replace professional skepticism or sound judgment.

Q: How has transactional risk insurance evolved from a risk-transfer tool into a strategic driver of deal execution?

Brett Burgan:
R&W insurance is no longer just a tool for transferring post-closing exposure. It has become part of how transactions are structured, negotiated, and executed. For sellers, R&W insurance can reduce escrows, limit continuing exposure, and provide greater certainty on proceeds available at closing. For buyers, it can provide recourse while allowing them to submit a more competitive bid and avoid prolonged negotiations over seller indemnification. It can also help preserve relationships when the seller’s management team remains involved in the business after closing.

Its strategic value depends on how well it is integrated into the transaction. The insurance process should begin early so diligence, purchase agreement negotiations, and underwriting inform one another. A policy cannot correct weak diligence or an incomplete understanding of the target. When used effectively, R&W insurance supports execution because the underlying risk has been examined and allocated thoughtfully, not because an insurer has agreed to assume part of it.

Q: What are some of the key factors influencing underwriting approaches, risk appetite, and policy structuring in transactional risk insurance today?

Brett Burgan:
Underwriting approaches, risk appetite, and policy structuring today are heavily influenced by how the R&W insurance market has performed relative to original expectations. Early on, the product was viewed as protection against low-frequency and catastrophic loss, with claims expected to emerge relatively quickly post-closing.

In practice, insurers have experienced a higher volume of claims, including more material claims asserted toward the end of policy periods and greater severity than anticipated. This has led to a more disciplined underwriting environment, even in a competitive market where pricing remains under pressure.

As a result, underwriting now places increased weight on diligence quality and transparency. Ultimately, underwriting is more favorable when the risk can be clearly explained and supported. Uncertainty alone does not necessarily prevent coverage, but unexplored or poorly documented uncertainty will often result in exclusions, higher retentions, or less favorable terms.

Q: Where are buyers still falling short in due diligence, particularly in emerging risk areas like artificial intelligence, cyber, and data?

Brett Burgan:
Buyers often fall short where emerging risks require deeper technical diligence than traditional approaches provide. In cyber and data environments, we have seen how weak controls, legacy systems, and limited visibility into third-party exposures can contribute to post-closing breaches, with insurers often absorbing significant losses.

Often, cyber and technology risks are treated as confirmatory diligence rather than as fundamental business risks. Buyers may focus on whether the target has had a breach without adequately assessing access controls, incident-response procedures, unsupported systems, third-party dependencies, and the target’s ability to detect an intrusion.

AI can add a layer of risk. Buyers should understand how AI is used, what proprietary or customer data is entered into external tools, whether AI-generated outputs affect customer deliverables or business decisions, and whether governance is in place.

These matters should be addressed early because the findings can affect valuation, contractual protections, insurance coverage, and the costs and complexity of integration.

Q: How can organizations balance the pressure for speed in dealmaking with the need for robust risk assessment?

Brett Burgan:
Speed and rigor are not necessarily competing objectives. Delays often arise because the deal team has not identified the most consequential risks early enough or because diligence workstreams are operating independently.

Begin by determining which assumptions are fundamental to value. This includes the quality and sustainability of earnings, cash flow, key customer and supplier relationships, regulatory compliance, tax exposure, and the reliability of the company’s systems and data. These areas should be prioritized, while lower-risk items run in parallel.

Communication is critical. Financial, legal, tax, operational, technology, and insurance advisers should share findings in real time, not wait for final reports. An issue identified in one workstream can affect valuation, the purchase agreement, policy coverage, and integration.

The goal is not equal depth across all issues; it is to recognize which issues could change the economics of the transaction and devote the appropriate time and expertise to them. A focused process is usually both faster and more defensible.

Q: What are the key lessons coming out of recent claims experience?

Brett Burgan:
A key lesson is that many significant claims arise from familiar areas, not novel risks. Financial reporting, contracts, compliance matters, and tax exposures continue to produce substantial losses when the facts discovered after closing differ from what the buyer understood at signing.

Claims also show the importance of connecting a breach to the value paid for the business. An inaccurate representation is only part of the analysis. Parties must also determine the resulting loss and whether the issue affected historical earnings, projected performance, the valuation multiple, required investment, or another component of the purchase price.

Documentation matters. Buyers should preserve the acquisition model, diligence findings, management explanations, and records of how risks were considered in pricing and structure. That evidence is essential when assessing damages and responding to arguments that a matter was known or already reflected in the transaction.

The broader lesson is that disciplined diligence and contemporaneous documentation improve outcomes and position parties to resolve future claims.

Q: How are insurers and dealmakers adapting to manage increasingly complex and evolving risk exposures going forward?

Brett Burgan:
Insurers are becoming more deliberate in individual transactions and portfolio composition. Industry exposure, transaction size, policy position, and concentration across similar risks all influence underwriting appetite.

At the deal level, insurers are directing greater attention to areas where business practices and risk are changing rapidly, including cybersecurity, data use, AI, regulatory compliance, and complex tax structures.

Dealmakers now involve insurance advisers earlier and emphasize diligence quality and coordination. A well-organized process gives the insurer a clearer understanding of the transaction and allows potential coverage concerns to be addressed before they become late-stage obstacles.

We may also see greater specialization. Complex risks may require dedicated diligence, tailored policy language, or separate insurance solutions rather than relying on standard R&W insurance to address every exposure.

The market remains competitive, but competitive terms do not eliminate the need for underwriting discipline. The most effective transactions are those in which the buyer, seller, advisers, and insurer develop a shared, well-supported understanding of the risks being transferred, retained, or otherwise addressed.

Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice specific to, among other things, your individual facts, circumstances and jurisdiction. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.