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Risk is no longer episodic, it is structural. As Australian organisations prepare for the new financial year, boards and dealmakers face persistent volatility across geopolitics, economics, technology and regulation. Here, Clayton Utz partners explore five pressing risk themes shaping Australian business today.
Presented by Clayton Utz
“Geopolitical fragmentation is a central macro risk,” says Emma Covacevich, Chief Executive Partner at Clayton Utz. “Ongoing international strategic competition is driving trade uncertainty, tech restrictions and supply-chain realignment.”
Economic pressures compound the challenge. Slower global growth, structurally higher interest rates and uneven inflation compress margins, increase refinancing risk and elevate insolvency exposure, particularly in leveraged sectors. Labour market tightness constrains productivity and raises workforce costs.
Technology adds urgency. As AI moves to enterprise scale, boards must manage cybersecurity, data governance, model risk, regulatory compliance, intellectual property exposure and reputational harm. Climate and regulatory risks converge – physical impacts threaten asset values and insurance availability, while ESG and climate disclosures heighten legal exposure.
This article is just a snapshot of an evolving landscape, explored in greater depth throughout our Australia’s Corporate Risk Landscape 2026 series.
FIRB: Navigating security and investment
Australia’s Foreign Investment Review Board (FIRB) now applies a sharply calibrated approach.
High-risk transactions face rigorous scrutiny, while lower-risk proposals in non-sensitive sectors are processed faster. The March 2025 Foreign Investment Policy formalised a risk-based framework, strengthening monitoring, operational controls and oversight of arrangements with material tax implications.
“Sensitive transactions demand early engagement with FIRB and Treasury, focused due diligence on national security and tax risks, and a readiness for bespoke conditions. Non-sensitive proposals backed by compliant or passive investors can leverage accelerated timelines,” explain Samy Mansour and Mariam Azzo.
Ultimately, regardless of the transaction's sensitivity, the pair recommend preparing for bespoke conditions, conducting thorough due diligence on national security, financing and IP, and monitoring policy changes. These, they add, can help investors “navigate the FIRB framework effectively and seize opportunities in an evolving market”.
Navigating mandatory climate reporting
Corporate risk is no longer limited to financial and operational factors; environmental disclosure has become a critical governance focus.
Australia’s mandatory sustainability reporting regime introduces detailed reporting obligations, alongside heightened scrutiny from ASIC, investors and interest groups on the accuracy and credibility of climate-related financial risk and opportunity disclosures.
Against this backdrop, Claire Smith and Emily Tranter urge directors to focus on key risk areas, including compliance with the Corporations Act and Australian Sustainability Reporting Standards (AASB S2), and close assessment of management’s materiality determinations and time horizons for climate risk and resilience assessments.
“Directors should know how management has approached scenario modelling, if disclosures are appropriately quantitative/qualitative, and whether datasets are sufficiently disaggregated to avoid misleading impressions,” add Smith and Tranter.
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When whistleblowing goes public
Governance challenges extend beyond external reporting, with internal controls and staff reporting mechanisms also under the microscope.
The Super Retail Group saga involving alleged misconduct shows how quickly internal complaints can escalate. Executive disclosures sparked Federal Court action, an ASIC probe, and the CEO’s exit, while boards now face the prospect of personal liability and intense scrutiny over oversight and decisions, explain Amanda Lyras and Tobin Meagher.
The pair advise boards must ensure whistleblower programs are robust, complaints are investigated, confidentiality is preserved and remedial action taken. Moreover, directors must balance continuous disclosure obligations with whistleblower protection, ensuring staff trust while mitigating regulatory and litigation risk.
“The lesson is clear – boards are ultimately responsible for the whistleblowing program and ASIC expects director oversight and senior executive accountability to be embedded within it,” explain Lyras and Meagher. “Effective programs are core to good governance, risk management and preventing a whistleblower disclosure spiralling into a public relations nightmare”.
AI behind the scenes in commerce
Technology is reshaping both internal operations and the broader market. Hilary Searing and Cynthia Elachi note that, despite the National AI Plan’s ambitions, existing laws still govern AI use – requiring employers to ensure decisions are fair, transparent and compliant with anti-discrimination and workplace obligations.
Key risks include bias in training data and the opacity of AI “black box” systems, alongside privacy and monitoring obligations.
As they observe: “Responsible AI in the workplace is not about resisting innovation; it’s about aligning technological capability with legal compliance, ethical standards and organisational values.”
The secret agent
Autonomous AI systems are beginning to transact without human intervention, reshaping the consumer journey and creating new legal and commercial risks. Simon Newcomb and Kirsten Webb note these systems can act unpredictably – entering transactions, sharing information or engaging in conduct that may mislead or breach competition and consumer laws – while ultimate accountability remains with the business.
“Boards and business leaders who fail to engage with autonomous systems proactively may find they are shaping outcomes – and possibly liabilities – faster than governance frameworks can respond,” note the pair.
“Autonomous AI agents are potentially creating commercial and legal challenges for businesses across consumer and B2B transactions.”
Conclusion
Across corporate strategy, foreign investment, whistleblower governance and AI adoption, the Australian business landscape demands foresight, rigorous oversight and proactive engagement. FIRB reforms, mandatory climate reporting, whistleblower accountability and autonomous AI systems intersect with enterprise strategy, capital allocation and risk management.
Boards and investors who engage early, plan rigorously and embed governance throughout their organisations will mitigate risk while positioning themselves to seize opportunities in a complex, evolving market.
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