Is there a way we can update a CDT on all running process instances?

Just keep in mind that as explained here: ttps://forum.appian.com/suite/help/7.9/Process_Upgrade.html#Requirements_for_Upgrade

"For example, if the target model has a PV (`pv!person`) of type Person^2 and the source model has the same PV but of type Person, the process will not upgrade because the CDT types are different."

Therefore a possible solution is to add add a process variable of the new type leaving the existing one pointing to version ^X of the CDT then remap nodes to point to the new variable which will be indeed of the updated verison.

For backwards compatibility in processes Appian doesn't let you update Person^2 to Person since there can be places where the mappings to fields won't match.

Just keep in mind that as explained here: ttps://forum.appian.com/suite/help/7.9/Process_Upgrade.html#Requirements_for_Upgrade

"For example, if the target model has a PV (`pv!person`) of type Person^2 and the source model has the same PV but of type Person, the process will not upgrade because the CDT types are different."

Therefore a possible solution is to add add a process variable of the new type leaving the existing one pointing to version ^X of the CDT then remap nodes to point to the new variable which will be indeed of the updated verison.

For backwards compatibility in processes Appian doesn't let you update Person^2 to Person since there can be places where the mappings to fields won't match.