Sharp year-on-year increases across every major risk category signal a structural shift in corporate risk, with governance and resilience now central to strategic decision-making, according to new research from global law firm Clyde & Co.
The firm's latest Corporate Risk Radar, based on a survey of 700 senior decision-makers across eight regions and ten sectors, found that business leaders are no longer dealing with isolated challenges but with compounding threats that overlap and trigger wider operational, commercial and reputational consequences. Respondents, including CEOs, CFOs, COOs, general counsel and board members, represent organisations with an average global turnover of $14.7 billion.
Despite the rising pressure, confidence remains notably high, with 95% of organisations saying they are confident in management's ability to identify and mitigate material risks.
Kevin Sutherland, chair of global practice groups and global head of aviation at Clyde & Co, said: "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."
The proportion of organisations saying geopolitical risk is affecting commercial performance has risen from 49% to 72% year-on-year, while four in five say trade policy changes and evolving tariff environments are materially influencing where and how they operate. Nearly three-quarters of business leaders say deglobalisation could materially affect growth over the next five years, and 60% expect conflict escalation to have a significant impact within the next 12 months.
For UK insurers and London market participants, the consequences are already tangible. Geopolitical developments are increasingly affecting economies through trade, financial and policy-related channels in ways that are persistent rather than short-lived, raising challenges for pricing, reserving and capital modelling. For Lloyd's syndicates and UK insurers, sustained instability is translating into greater underwriting volatility, more selective risk appetite and firmer pricing across specialty lines.
Jan Spittka, partner at Clyde & Co, said: "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."
Technology risk recorded the largest year-on-year increase of any category, with 86% of leaders rating it high impact compared with 46% in 2025. As AI adoption accelerates, governance is struggling to keep pace: 76% of organisations say AI, data privacy and cybersecurity requirements are evolving rapidly, but only 68% have a mature AI governance framework in place.
The picture in the UK insurance market reflects a similarly cautious trajectory. Despite more formalised governance cycles, only 28% of UK insurance leaders strongly agree that their governance cadence is sufficient to keep pace with AI innovation, according to Earnix's 2026 Insurance Trends Report. The Bank of England's most recent survey of AI in UK financial services found that 46% of respondent firms reported only a partial understanding of the AI technologies they use, largely due to the adoption of third-party models. The FCA's 2026 Insurance Regulatory Priorities report confirmed it will assess how firms are using AI internally, with a focus on identifying barriers to adoption and understanding associated risks, though it has no current plans to introduce AI-specific rules.
Tim Crockford, partner at Clyde & Co, said: "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. 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."
Some 85% of business leaders now rate regulatory and compliance burden as high impact, up from 54% last year, while 82% say it is affecting their ability to invest and grow. UK insurers are navigating this against a backdrop of significant regulatory change. The FCA's 2026 Insurance Regulatory Priorities report confirmed the regulator is seeking a better balance between growth and consumer outcomes, and committed to simplifying rules and data requirements to reduce unnecessary burdens on firms. Under Consumer Duty, however, the evidential bar has risen: it is no longer sufficient to demonstrate compliance with rules, and firms must evidence how customer outcomes are assessed, monitored and improved on an ongoing basis.
Rebecca Kelly, partner at Clyde & Co, said: "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."
Some 86% of leaders now rate operational challenges as high impact, up from 61% last year. The biggest pressure points include technology implementation and systems integration, cited by 72%, alongside skills shortages and transformation risk. Nearly six in ten respondents said the complexity of overlapping risks is the single biggest barrier to managing them effectively.
The International Underwriting Association has warned that insurers must simultaneously monitor geopolitical unrest, climate extremes, cyber threats, AI-related exposures and fast-moving litigation trends, a convergence that closely mirrors Clyde & Co's findings.
Marianne Anton, partner at Clyde & Co, said: "Operational teams used to work in their silos, focused on moving individual projects forward. 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."
