Danger that’s encircling Royal Engineers (6)
I believe the answer is:
threat
'danger' is the definition.
(threat can mean a danger or risk)
'that's encircling royal engineers' is the wordplay.
'encircling' indicates putting letters inside.
'royal engineers' becomes 'RE' (abbreviation).
'that' going around 're' is 'THREAT'.
(Other definitions for threat that I've seen before include "Intimidation or warning" , "Declaration of intention to harm another" , "The rat became a menace" , "Potential source of danger" , "Aggressive declaration" .)