Economic volatility, geopolitical upheaval and artificial intelligence (AI) have driven the corporate threat level to its highest in 12 years, according to Clyde & Co’s 2024 Corporate Risk Radar.

The survey of C-Suite decision-makers, in-house legal teams and general counsel, conducted in partnership with research consultant Winmark Global, found escalating threats on multiple fronts are creating a “polycrisis” of risk — forces that when combined produce the chance for greater losses.

The report found that 67 percent of leaders surveyed say that the risk landscape is now “many times more complex” than it was just three years ago at the height of the pandemic.

Complicated and often contradictory global regulatory risk was cited as a major obstacle to corporate growth.

FOMO or “fear of missing out” on artificial intelligence (AI) is prompting a “gold rush” mentality around the disruptive technology, the analysis showed.

Attracting and retaining talent, particularly from overseas, has become increasingly difficult and more costly.

Risk caution is estimated to be costing as much as 5 percent of corporate revenues, with more than a quarter of respondents saying that risk perception was hindering “bold decision-making.”

“Organizations are having to deal with risks that were never on their radar in the past. An unpredictable economic environment with shorter and more volatile cycles is being fueled by growing geopolitical tensions. In response, we are seeing a proliferation of sanctions and a greater regulatory burden which organizations must now navigate,” said Eva-Maria Barbosa, a partner at Clyde & Co. “Add to this the growing impact of AI and the sheer number of risks could feel overwhelming for any business. With all of this to contend with, effective planning and risk prioritization is becoming crucial, with more and more companies understanding the importance of consistent horizon scanning.”

Economic risk – inflation, interest rates and currency volatility – was the top threat, according to business leaders. This was followed by “people” challenges, which include attracting and retaining talent, upskilling, management and succession planning.

AI and the risks associated with it are evident, the report found.

While respondents said that AI was a potential source of competitive advantage, an urgency to embed the technology is driving a fear of being left behind which could problematic.

Divergent and sometimes contradictory regulations on AI are just one concern respondents cited, but they are part of a much wider concern about the overall regulatory burden companies are having to manage.

Regulatory and compliance risk is now the joint second biggest issue organizations are tackling, according to the report — up 9 percent on 2023’s findings.

“With numerous regional conflicts persisting or escalating and further political uncertainty and upheaval likely thanks to an unprecedented year of elections around the world, geopolitical risk surged 11 percent from last year, ranking fourth,” the report stated.

Leaders surveyed said that market disruption – including AI – was now the risk they feel least prepared for, eclipsing climate change, geopolitical and societal risks.

General counsel were the least optimistic about their readiness to deal with market disruption, the report found.

Respondents said that scenario planning and risk horizon scanning was now a much bigger part of their jobs than it was just a few years ago.

The report found that some respondents highlighted the growing tension between boards and executive risk management, with the suggestion that boards were often relying too heavily on executives to identify and present risks.

“This year’s report shows that the business of doing business has become more unpredictable than ever. Most of us have now come to terms with the fact that there is no longer such a thing as ‘normal’ and that a different mindset is needed when assessing and responding to risk. Navigating risk is not just a defensive play but a crucial enabler of commercial opportunity and global economic activity,” said Carolena Gordon, senior partner atClyde & Co. “It is encouraging to see that, despite the headwinds, businesses are increasingly taking a proactive approach to risk management.”