The rise of artificial intelligence has led to technology risk consuming businesses across governance, regulation and reputation, according to a report from Clyde & Co.

The law firm’s global research shows 86% of company leaders rate technology as high-risk, up from 46% last year – the biggest year-on-year rise for any risk category.

Clyde & Co’s Corporate Risk Radar 2026 – subtitled Navigating Risk Without Respite – says AI is no longer a future technology but an operational reality addressed in business models.

“As organisations adopt AI at pace, technology risk is rising sharply and extending far beyond the technology function into governance, regulation and reputation,” the report says. “What makes this more than an IT challenge is the way AI adoption has restructured dependency and vulnerability across entire organisations.”

As businesses integrate AI, they become more reliant on concentrated groups of third-party technology providers, the report says.

This can expose companies to cascading failures created by interconnection.

Governance is struggling to keep pace, with 76% of organisations saying AI, data privacy and cybersecurity requirements are moving quickly.

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Only 68% have mature AI governance frameworks in place. Nearly eight in 10 leaders say AI and new technology will significantly influence their business over the next five years.

Clyde & Co Australia managing partner Rebecca Kelly says businesses are not only focused on which technologies to adopt, but also how to manage them.

“The challenge for clients has shifted from implementation to control. They are asking what to deploy to keep pace, but equally how to govern its use.

“If you look back 10 years, there were no whistleblower regimes, no governance overhauls, no environmental, social and governance frameworks.

“Those are now embedded in a sound corporate governance structure. AI governance is moving in the same direction.”

The survey of 700 senior decision-makers worldwide finds 72% say geopolitical risk is having a direct commercial impact, up from 49% previously.

Regulatory and compliance burden is cited by 85% of respondents as high-impact, up from 54%.
Four in five organisations say geopolitical shifts influence where and how they operate globally.

The complexity of overlapping risks is the biggest barrier to managing them effectively, according to 60% of respondents.

But despite rising pressure, 95% of organisations are confident in management’s ability to identify and mitigate material risks.

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