Top trends (and risks) of 2026
Globally, uncertainty is defining the risks outlook, according to the World Economic Forum’s Global Risks Report 2026 which is based on an annual survey of more than 1,300 global leaders and consultations with risk experts. Half the respondents anticipate ‘either a turbulent or stormy outlook over the next two years, deteriorating to 57% over the next 10 years.’
‘Geoeconomic confrontation, mis- and disinformation and societal polarisation make up the top three short-term risks, while environmental risks dominate in the long term.’ Extreme weather events and cyber insecurity are also high on the risk perceptions list – both big issues for Australian businesses too.
Closer to home, ‘New technologies, including AI, and issues around AI ethics and implementation jumped from fourth place in 2025 to take the number one spot as the biggest issue facing businesses now,’ according to KPMG Australia’s annual Keeping us up at Night survey (a survey of 274 C-Suite executives and board members across a range of industries).
Digital transformation and optimisation came in second and cyber security risks third while concerns around inflationary cost controls and talent sourcing and productivity have been pushed down the KPMG list.
Overall, top trends and risks for Australian businesses in 2026 include:
- AI, technology and cyber
- Global conditions, including supply chain disruptions
- Economic conditions and sentiment
- Cost pressures
- Human resources – attracting and retaining good people
- Regulation and compliance.
AI, technology and cyber
In December 2025 the Federal Government released its National AI Plan to grow the AI industry in Australia. It has committed or made available more than $460 million for AI and related initiatives.
The Government has also announced it will launch an ‘AI Accelerator’ funding round of the Cooperative Research Centres (CRC) program ‘to accelerate the development and commercialisation of AI by businesses and researchers across Australia and turn innovative ideas into real-world solutions.’
Minister for Industry and Innovation, Tim Ayres, says in his Foreword to the plan that ‘AI should be used to help close service gaps in health, disability and aged care, improve education and employment outcomes; and create secure, well-paid jobs in future industries.’ He has promised a consultative approach to AI adoption in the workplace.
The plan claims Australia is an ‘active and influential player in the global AI ecosystem’ and ranks highly in AI use by consumers. ‘Demand for AI-skilled workers has tripled since 2015, underscoring Australia’s position as a hub for cutting-edge technology and talent (Bratanova et al. 2025),’ it says.
Mid-last year, Amazon announced it will invest $20 billion through to 2029 in building data centres in Australia to ‘hasten AI adoption across the country, boost productivity and modernise the IT infrastructure for Australian entities.’ In August 2025, Amazon released data saying 1.3 million or half Australian businesses now regularly use AI.
The Reserve Bank of Australia tells a different story, based on a survey of more than 100 medium-large firms in its RBA liaison program, aimed at understanding how technology investments are affecting their operations, including their appetite for and adoption of AI.
It reports in the 13 November 2025 RBA Bulletin that ‘the value of technology investment in the Australian economy has grown strongly, increasing by almost 80 per cent…’ driven significantly by cyber risks and firms preparing for the adoption of AI and ML (machine learning) tools. However, Australia’s rates of adoption of and trust in AI are presently at the lower end, compared with countries around the world.
Risks and opportunities
The motivations for increased investment in technology cited by RBA Liaison firms include:
- Improved customer experience
- Capacity and service expansion
- Cost savings – increased efficiencies
- Compliance and regulation
- Required system upgrades
- Improved competitiveness
- Productivity gains.
With opportunity, comes risk including:
- Cybersecurity risks
- The loss of human interaction and relationships
- Potential for inappropriate use (with reputational and legal risk)
- Access to skilled workers
- Decreased productivity during introduction and integration.
As well as traditional cyber security measures (many of which are detailed in previous articles), measures to manage the risk in adopting AI could include (but are not limited to):
- Strong partnerships with skilled specialists
- Strategic recruitment
- Staff awareness, reskilling and training
- Good governance including robust policies and protocols
- Consistent monitoring and supervision.
The World Economic Forum says ‘awareness, education, reskilling and guardrails’ are essential to mitigation strategies to address technology and AI-related risks, and the Department of Industry has provided clear guidance for AI adoption including mitigating risks and harms, and the Australian Signals Directorate launched advice for SMEs in managing cyber security risks in mid-January 2026.
Global conditions, including supply chain disruptions
U.S trade tariffs and global trade tensions, along with rising geopolitical issues, are feeding high levels of global uncertainty – and Australia is far from immune.
While some industry sectors (advanced manufacturing, metals, pharmaceuticals and more) are feeling the direct impacts, there are also rippling indirect effects.
Before memories of supply chain disruptions brought on by the pandemic can fade, the Australian Industry Group reports Australian supply chain performance dropped last year, and there’s more pain on the way.
‘47% of industrials are now experiencing disruptions, with the rate set to rise as US tariffs work through supply chains. This is increasing costs, constraining growth and hampering productivity in our industrial businesses,’ the AIG reported in October 2025.
In response, investment in supply chain resilience has increased and the AIG says that will continue in 2026, and it urges regulatory reform to ease supply chain pressures on business.
Managing the risk:
- Spend time on strategy, clearly identifying vulnerabilities and mitigation measures
- Explore and invest in technology upgrades (including AI)
- Prioritise cyber security
- Assess flexibility – how quickly can the business pivot
- Develop options – expand the supplier network
- Nurture supplier relationships
- Diligent contract management
- Consider where, and how much stock is held
- Stay across emerging risks and update strategies.
Economic conditions and sentiment
Australian businesses took the Year of the Horse to heart and entered 2026 feeling better than they had in almost a year according to Roy Morgan Confidence series, which is based on interviews with 1,200 businesses each month.
The idea of a year of optimism and opportunity wasn’t resonating with consumers, with the Westpac-Melbourne Institute Consumer Sentiment Index slipping 1.7% lower to 92.9 in January, from 94.5 in December. ‘Consumers are becoming more concerned about what 2026 may bring for family finances and the wider economy,’ reported the bank.
ANZ’s Chief Economist, Richard Yetsenga, was reasonably upbeat in talking about the big themes of 2026 and says ‘Australia’s fundamentals remain solid – the national balance sheet is strong, commodity prices are at high levels, and the labour market has only weakened modestly.’ But just a few months ago, three senior Commonwealth Bank economists were using words like ‘uncertain’, ‘tense’ and ‘risky’ to describe the 2026 outlook. ‘Volatility’, the Bank reported, would be ‘one of the key buzzwords for 2026.’
Head of Market Insights at J.P. Morgan Commercial Banking, Ginger Chambless, summarised business sentiment like this: ‘Despite mixed sentiment on the economic outlook, most business leaders remain confident about the year ahead for their own companies. Navigating macro uncertainty and managing through challenges has become the new normal. Midsize business leaders remain focused on driving sales and profit growth regardless of economic conditions.’
Releasing the findings of its annual Business Leaders Outlook survey, J.P Morgan says business leaders/ businesses are focused on proactive planning and are:
- Prioritising product innovation and profitability as growth strategies
- Interested in strategic partnerships and investments
- More interested in mergers and acquisitions as a growth strategy
- Planning to implement AI (mostly for process automation, predictive analytics, market intelligence).
Meanwhile, CPA Australia offers these fundamental tips for small businesses in uncertain times.
Managing the risk:
- Reduce reliance on external debt
- Improve productivity
- Review cost structures to find savings
- Adopt appropriate risk management strategies
- Review your business plan.
Other measures include:
- Product or service innovation – diversity income streams
- Maintain a focus on governance and compliance
- Monitor cash flow and profitability carefully
- Look after customers – good communication, loyalty programs and more.
Human resources – attracting and retaining good people
Despite slightly increasing unemployment in Australia, finding and attracting good people remains a key challenge for business in 2026.
Australian Treasury forecasts indicate unemployment will increase this year, to about 4.5% by the end of 2026 and a small positive shift in employment growth.
Job Skills Australia last month reported:
- Aged and disabled carers was the fastest growing occupation
- High demand for accountants
- Electricity, gas, water and water services was the fastest growing sector
- Healthcare and social assistance was the largest growing industry.
In what may be good news (or a double-edged sword), new data from LinkedIn has found ‘Amid a tougher labour market and increased competition, workers are opting to stay in their current roles in a trend known as ‘job hugging’.
‘Job hopping is out, and job hugging is in,’ reported LinkedIn after analysing results from a study of more than 2,000 workers who were asked about their job plans in the year ahead. Employers will also be pleased to hear LinkedIn career expert, Brendon Wong, say job hugging had replaced the ‘quiet quitting’ of a year or more ago where people were doing as little as possible.
Seek Employer identified ‘more competition for talent’ as one of its five hiring trends to watch in 2026. ‘Data showed a noticeable increase in recruitment intensity, with slightly stronger advertised salaries, a rise in no-experience roles, and an uptick in ads per hirer,’ he says. This suggests employers are actively competing for talent – a trend that’s likely to continue into the new year (2026).’
What can business, and particularly SMEs, do in the face of ongoing labour risks?
Managing the risk:
- Continue to make people and culture a priority
- Identify and develop strong leaders
- Undertake a skills audit – identify skills gaps
- Invest in training and upskilling – promoting from within may be the best option
- Communicate and engage with staff – find out what matters to them, and their appetite for flexibility or upskilling
- Review employee remuneration and rewards
- Update recruitment processes.
Regulation and compliance
The Australian Federation of Employers and Industries says that ‘For many businesses, particularly small businesses, employment laws and workplace regulation generate their largest operating expense through labour costs and are their greatest compliance concern.’
There are some important changes to legislation, regulation and related requirements for employers in 2026. As well as general laws applying to all employers (such as the new payday superannuation regime), there is a raft of industry-specific and state or territory-based legislation and regulations with which business owners and employers may need to comply.
Here are just five big changes to come:
- Payday superannuation: From 1 July 2026, businesses must pay superannuation at the same time as wages and salaries (and received by the super fund within seven days). This replaces the current quarterly payment requirements. This is a significant change and may have cash-flow, systems and processes, software, communication, training and other implications that need consideration and preparation.
- More changes to paid parental leave: From 1 July this year, eligible parents can receive an extra two weeks’ paid parental leave. That’s a total of up to 26 weeks or six months based on a standard five-day working work. (Don’t forget employers also now need to pay superannuation on paid parental leave.) Employers may wish to update their own policies, payroll systems and human resource planning, given the change.
- Non-compete clauses and other restraints: The Government announced these last year and they are expected to come into effect in 2027: It claims the changes will make it easier for workers to switch to a better job and lift wages, spur new business entry and competition.
- Gender equality targets: New legislation requires large employers (500 or more employees) to choose and commit to three of the 19 gender equality targets detailed on a Targets Menu – and then report on progress after three years. Employers covered by the legislation will need to select their three targets when they lodge their Gender Equality Report in 2026.
- Privacy: From 10 December 2026, any agency or organisation to which the Australian Privacy Principles apply for the purposes of the Privacy Act 1988 (Cth) (Privacy Act) must include additional information in its Privacy Policy if it arranges for a computer program to use personal information to make decisions that could reasonably be expected to significantly affect the rights or interests of an individual.
There is no sign of the rate of change slowing, with a number of Government reviews underway which could lead to further legislative change ahead. This includes potential changes to the National Employment Standards (minimum employment entitlements that have to be provided to all employees). Submissions are open until Friday 27 February 2026.
Managing the risk:
- Prioritise and resource compliance appropriately
- Plan ahead – map upcoming legislative changes (by jurisdiction if required) and factor preparations in
- Review and update policies
- Update systems
- Invest in technology
- Consult and communicate
- Provide training – well ahead of implementation and on an ongoing basis
- Maintain good records
- Seek external expert advice as required.
Role of insurance
Having proper insurance cover in place is a key mitigation strategy to address a range of business risks. With your EBM Account Manager, you can identify in detail what exposure your business has and what insurance solutions might be appropriate.
Key considerations include:
- Your business activities
- Legal and regulatory obligations
- Business assets
- Tailoring Business insurance – for property and liability exposures
- Cyber risks
- Protection for directors and officers.
Key takeaway
Cyber, AI and technology more generally top the list of challenges (and opportunities) for businesses in 2026. Operating costs, supply chain disruptions and compliance are also high on the list.
There’s good advice available from a range of different sources including government, industry bodies, major consulting firms and large advisory agencies on how to meet the challenges of 2026 and manage new, evolving and emerging risks.
Need expert guidance?
Your EBM Account Manager can provide you with information to help manage a wide range of business risks in 2026, and ensure your business is well protected.
