How Are AI, Geopolitics and Regulation Redefine Corporate Risk in 2026

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.

The latest edition of the firm’s Corporate Risk Radar, 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 organisations with an average global turnover of $14.7 bn.

Key highlights

• Businesses face a permanently higher-risk environment as geopolitical instability, AI-related risks and regulatory pressures increasingly overlap and amplify one another.
• Geopolitical risk has become a direct commercial issue: 72% of organisations say it is affecting performance, while 73% expect geopolitically driven deglobalisation to materially affect growth over the next five years.
• Technology risk has risen most sharply, with 86% of leaders viewing it as high impact.
• AI adoption is moving faster than governance, as only 68% of organisations report having mature AI governance frameworks. Regulatory and compliance pressures are intensifying, with 85% of respondents rating them as high impact.
• Regulatory failures now carry immediate reputational, investor and trust-related consequences. Despite heightened uncertainty, 95% of organisations remain confident in management’s ability to identify and mitigate material risks, reflecting continued investment in resilience, governance and operational preparedness.

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 (see What Drives the Accelerated AI Adoption in the Insurance Industry?).

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.

“Risk now sits at the centre of how organisations operate, driven by the increasing interaction between geopolitical, technological and regulatory pressures. Those that are adapting most effectively are integrating resilience and governance into core decision-making, so they can respond quickly and maintain momentum as conditions evolve,” Kevin Sutherland, Chair of Global Practice Groups & Global Head of Aviation at Clyde & Co, said.

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.

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.

• 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%
• 4 in 5 organisations say geopolitical shifts are influencing where and how they operate globally
• 6 in 10 say the complexity of overlapping risks is the biggest barrier to managing them effectively

“We are living in a world where you can wake up in the morning and face a complete shift in the geopolitical situation. 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,” Jan Spittka, Partner at Clyde & Co, said.

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 (see why Most AI Projects Fail to Deliver ROI).

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. 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,” Tim Crockford, Partner at Clyde & Co, said.

“That’s why the governance framework that comes with Generative 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.”

Regulatory requirements are expanding rapidly across jurisdictions

Regulatory requirements are expanding rapidly across jurisdictions, increasing both compliance pressure and exposure to reputational damage (see How AI Agents Speed Up the First Step in Insurance Claims).

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.

Most serious regulatory breaches arise from failures to disclose. 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.

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

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. 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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AUTHORS: Jan Spittka – Partner at Clyde & Co, Kevin Sutherland – Chair of Global Practice Groups & Global Head of Aviation at Clyde & Co, Tim Crockford – Partner at Clyde & Co, Rebecca Kelly – Partner at Clyde & Co

Edited by Peter Sonner – Lead Tech Editor at Beinsure