Businesses face permanent high-risk environment as AI, geopolitics and regulation converge

Businesses are facing a permanent high-risk environment, as sharp rises in technology, geopolitical and regulatory threats create a more volatile operating environment and force tougher strategic choices, according to new research from global law firm Clyde & Co.

• 86% of business leaders now rate technological risk as high impact, up from 46% last year
• 72% say geopolitical risk is having a direct commercial impact, up from 49%
• 85% cite regulatory and compliance burden as high impact, up from 54%
• Four in five organisations say geopolitical shifts are influencing where and how they operate globally
• Nearly six in ten say the complexity of overlapping risks is the biggest barrier to managing them effectively

London, UK (July 1, 2026) – The latest edition of Clyde & Co.’s Corporate Risk Radar report, based on a survey of 700 senior decision-makers across eight regions and ten sectors, shows sharp year-on-year increases across every major risk category. Respondents – including CEOs, CFOs, COOs, General Counsel and board members – represent organizations with an average global turnover of $14.7 billion.

The findings suggest risk is no longer being experienced as a series of isolated challenges. Instead, business leaders are increasingly dealing with risks that overlap, compound and trigger wider operational, commercial and reputational consequences.

However, despite the rising pressure, confidence remains high. 95% of organisations say they are confident in management’s ability to identify and mitigate material risks, suggesting many businesses are continuing to invest in preparedness even as the environment becomes harder to predict.

“We are delighted to have acted for Al Taamir Leasing and Factoring (Al Oula) S.A.E. in connection with this issuance, which forms part of the company’s ongoing securitization transactions,” said Mostafa El-Sakka, Partner, Clyde & Co. “The transaction further strengthens our track record in the non-banking financial services sector, where our Office has consistently advised on significant and pioneering transactions, reflecting the strength, expertise, and professionalism of our team. We look forward to supporting our clients on many more successful transactions in the future.”

Geopolitics reshapes global operating models

Geopolitical volatility is now having a more direct commercial impact on business, with 72% of organisations saying it is affecting performance, up from 49% last year. Four in five say geopolitical shifts, trade policy changes and evolving tariff environments are materially influencing where and how they operate globally.

The pressure is not expected to ease. 73% of business leaders say deglobalisation driven by geopolitical decisions is creating uncertainty that could materially affect growth over the next five years, while 60% expect conflict escalation and international instability to have a significant impact on their business in the next 12 months. As a result, organisations are restructuring operations to reduce exposure to single markets, suppliers and jurisdictions.

“We are living in a world where you can wake up in the morning and face a complete shift in the geopolitical situation,” said Jan Spittka, Partner, Clyde & Co. “Organisations need to reduce their dependency on providers and suppliers in any one region. But above all, it is important first to accept this reality, and then to try to become more agile in dealing with it.”

AI adoption outpaces governance frameworks

Technology risk saw the largest increase of any category in this year’s research, with 86% of leaders rating it high impact, compared with 46% in 2025. As AI adoption accelerates, governance is struggling to keep pace, with 76% of organisations saying AI, data privacy and cybersecurity requirements are evolving rapidly, but only 68% have a mature AI governance framework in place.

This comes as 79% of leaders say AI and new technology will significantly influence their business over the next five years.

“All businesses are trying to adapt to AI as quickly as they can, but the speed at which it changes makes that a big challenge,” said Tim Crockford, Partner, Clyde & Co. “When you ask whether organisations have a mature AI governance framework in place, some will say yes today, but that will be out of date by tomorrow. That’s why the governance framework that comes with AI needs to keep up with the evolution of the technology, and organisations need to understand when it’s being used, how it’s being used, and have steps in place to prevent misuse.”

Rules tighten as reputational stakes rise

Regulatory requirements are expanding rapidly across jurisdictions, increasing both compliance pressure and exposure to reputational damage. 85% of leaders now rate regulatory and compliance burden as high impact, up from 54% last year, while 82% say regulatory obligations are influencing their organisation’s ability to invest in and grow the business.

As scrutiny intensifies, regulatory failures are increasingly translating into reputational damage, investor pressure and loss of trust.

“Most serious regulatory breaches arise from failures to disclose,” said Rebecca Kelly, Partner, Clyde & Co. “Companies face very short timeframes to disclose and act in the company’s best interests. The reputational risk is equally significant, as consequences can be immediate and played out publicly.”

Multiple pressures are hitting day-to-day operations

The convergence of geopolitical instability, rapid technological change and mounting regulatory pressure is increasingly being felt inside organisations through day-to-day operational strain. 86% of leaders now rate operational challenges as high impact, up from 61% last year, as businesses deal with the practical consequences of managing multiple pressures at once.

The biggest pressure points include technology implementation and systems integration (72%), alongside skills shortages and transformation risk, showing how wider external disruption is increasingly playing out through delivery, execution and business change.

“Operational teams used to work in their silos, focused on moving individual projects forward,” said Marianne Anton, Partner, Clyde & Co. “What we’re seeing now is that those dots are being joined across organisations. Risks are being escalated to management, and senior leaders are starting to understand how they are interconnected and to draw those threads together.”

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Access the Corporate Risk Radar 2026 report.

About Clyde & Co

Clyde & Co is a leading global law firm, helping organizations navigate risk and maximize opportunity in the sectors that underpin global trade and commercial activity, namely: insurance, aviation, marine, construction, energy, trade and natural resources. Globally integrated, the firm has 490 partners, 2,400 lawyers, 3,200 legal professionals and 5,500 people overall in nearly 70 offices and associated offices worldwide. Learn more at www.clydeco.com.

Source: Clyde & Co

Tags: Artificial Intelligence (AI), Clyde & Co, outlook / predictions, top risks, trends