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Businesses worldwide are facing a more volatile risk landscape with expectations of a more combative corporate environment. This is according to Clyde & Co’s Corporate Risk Radar report, which highlighted growing concerns among business leaders about a rise in disputes and legal exposure, due to a mix of geopolitical, economic and technological risks, which was released last week.
The report stated that 48% of global businesses anticipate an increase in disputes in the years ahead. These risks were no longer isolated; they overlapped, making them harder to manage.
This trend was also particularly significant for heavily regulated industries such as insurance and financial services, said the report, where legal compliance and operational continuity were closely intertwined. This is relevant to investors because a more fragmented, unstable world could affect diversification in portfolios if there has to be a pullback from certain sectors or places.
As legal exposure grows, even businesses that weren’t seen as high-risk are now being affected. “Previously, regulated companies were the main focus, but this has expanded over the last few years to include businesses not typically considered highly regulated,” said Sam Tate, Partner at Clyde & Co. “This expansion covers property transactions, asset holding, and areas such as failure-to-prevent laws, which apply across sectors.”
The report showed that almost half of the respondents of over 400 business leaders from around the world surveyed said they expected a rise in disputes, driven by prevailing economic conditions and the growing complexity of the current risk environment.
“Economic pressures are triggering disputes where once
there may have been a more pragmatic renegotiation."
This could relate to such areas as the tariffs, and other economic fallout from recent market volatility, the China-US hostility and trade issues, or the Middle East situation.
As legal, political, and financial uncertainties converged, the insurance industry faced rising pressure to adapt coverage strategies, manage loss costs, and anticipate litigation trends, it said. This could easily bleed into pressures on the investment side of businesses.
“Economic pressures are triggering disputes where once there may have been a more pragmatic renegotiation,” said James Roberts, Partner, at Clyde & Co. “Contractual tensions are particularly visible in sectors like professional services, construction, and technology, where clients are dealing with increased scrutiny around scope, delivery obligations, and pricing clauses."
In the survey, 57% said they were preparing for possible investor actions. This highlights the shift toward managing external scrutiny and regulatory expectations. These developments also pointed to a review of corporate strategies in response to an evolving legal and political climate.
Additionally, issues such as trade restrictions and supply chain disruptions to concerns about data governance meant businesses were dealing with risks that affected multiple parts of their operations. The report said this convergence of risk made legal disputes more likely and solving them more complicated and expensive.
This was especially noticeable in Mergers & Acquisitions and other international investments. Eva-Maria Barbosa, Partner at Clyde & Co, said that economic, political, and regulatory challenges were making these transactions more time-consuming and more difficult to manage.
The increased legal complexity was one of the key challenges businesses were facing, said the report. Companies were spending more time and resources navigating contracts, regulations and compliance across different jurisdictions
Geopolitical instability proved particularly influential, affecting nearly every other area of business risk. Events such as war or sudden changes in government policy had the potential to alter business operations overnight. In some cases, companies were forced to reconsider their geographical footprints entirely. This could dramatically change investor appetite around emerging markets and portfolio diversification.
This feeds into other risk, such as political polarisation, which is becoming a pressing global risk, driving increased political violence and unstable policies that threaten financial stability. Rising divisions, especially in democracies like the US and India, challenge business operations and complicate risk diversification.
The report highlighted that a number of global companies had been actively reconsidering their presence in certain regions due to heightened political risk, legal uncertainty, or the threat of regulatory retaliation.
Reputation risk also emerged as a critical challenge for insurers. Reputational damage caused by cyber events lead to significant shareholder value losses, highlighting the growing of managing cyber and brand risks at the highest levels. As these risks remain largely uninsurable, proactive strategies have become essential to protect long-term portfolio value and corporate reputation.
As pressures grow, investor scrutiny emerged as a growing source of potential legal exposure. According to the report, many companies were getting ready for more chances of shareholder actions, especially concerning ESG practices intensified.
Investors were holding companies responsible not just for their profits, but also for how they handled broader responsibilities like climate change, data privacy, and corporate governance.
When companies didn’t meet these expectations, they risked litigation, regulatory action, and harming their reputation, all of which could hurt their long-term success.
Recent events, such as the conflict between Iran and Israel, showed how unpredictable geopolitical risks could be. The situation served as a reminder to insurers that they should plan for different scenarios and be clear in their policies, especially when it came to business interruptions, the report said.
Even with these challenges, the report pointed to new chances for organisations that acted swiftly.
Those able to integrate legal risk management into broader strategy, stay flexible to external shifts and maintain stakeholder transparency were likely better prepared for future disruptions.
“Geopolitical upheaval is a game-changer, impacting every other
risk we measure. Navigating this environment is tough."
There was advice for those struggling with how to cope with the heightened reality. Even though legal and regulatory risks were still complicated, it said, businesses that understood how risks were changing and responded quickly had a better shot at maintaining stability and securing a competitive edge.
“This report paints a picture of risk that is increasingly complex,” said Barbosa. “Geopolitical upheaval is a game-changer, impacting every other risk we measure. Navigating this environment is tough, requiring heightened diligence, patience and resilience.”
