Risk aversion stalling growth as businesses retreat into compliance mindsets
Risk aversion stalling growth as businesses retreat into compliance mindsets
BDO’s 10th Annual Global Risk Landscape report has revealed an alarming trend: risk aversion is increasingly choking business growth worldwide.
Nearly seven in ten companies are now playing it safe - a rise from 61 per cent last year - while only 7 per cent say their risk management approach is truly proactive, down sharply from 29 per cent in 2023.
As crises mount and regulations tighten, a ‘wait and see’ mindset is leaving many organisations stagnant and exposed.
Regulatory risk has emerged as the top concern, with 35 per cent of executives feeling unprepared. While 39 per cent believe increased regulation reduces risk, many warn it also encourages a box-ticking culture that can distract from meaningful risk strategy.
According to BDO risk advisory services national leader Matt Williams, this shift is at the heart of the problem.
“Many organisations are leaning too heavily on a compliance-led approach,” Matt said.
“The result is a growing disconnect between regulatory adherence and real risk management.”
Talent and workforce capacity leapt from 12th to equal second on the list of top risks.
“Executives are increasingly concerned about attracting and retaining skilled staff, especially in sectors like healthcare, construction, and tech,” he said
Cyber risk continues to climb the agenda, with one in four CEOs now citing cybercrime as a top-three concern - up from 19 per cent last year.
The average cost of a data breach reached nearly $5 million in 2024, with AI-driven social engineering making threats harder to detect.
While 45 per cent of executives view AI as a growth enabler, 62 per cent warn it raises privacy concerns, and 56 per cent cite cybersecurity risks.
“Without a structured risk framework, AI optimism could easily turn into exposure,” Matt said.
With geopolitical instability rising, 28 per cent of leaders feel unprepared for supply chain disruptions.
Matt said adopting "flexsourcing" - a hybrid of nearshoring and friendshoring - to enhance supply chain resilience should be a priority for businesses.
Despite the surge in AI-enabled fraud, only 15 per cent of executives rank fraud among their top risks.
“Underinvestment in training and whistleblower systems is a blind spot that could leave businesses dangerously exposed,” Matt said.
Encouragingly, there are signs of a shift in mindset.
Seventy-four per cent of executives say embedding risk awareness into company culture is the key to moving beyond compliance toward more strategic, value-creating risk management.
“Embedding risk into the DNA of an organisation isn’t just about avoiding pitfalls - it’s about unlocking smarter decisions, faster responses, and greater resilience. The path forward isn’t risk aversion, but risk agility."
For media enquiries:
Tate Papworth
Manager, Media
E: Tate.Papworth@bdo.com.au
Ph: 0433411189