Business concerns around cybersecurity and data privacy risks have increased over the past year, and many leaders feel unprepared to weather the storm.
Overall, cybersecurity is the most pressing global business challenge, selected by 47% of C-suite leaders in a new report from Kroll, a global risk and financial advisory company. Respondents ranked cybersecurity concerns ahead of artificial intelligence (AI) developments and integration (43%), economic instability and data privacy concerns (36% each), and geopolitical tensions (33%).
Related to cybersecurity, respondents cited malware concerns (44%), data extortion and exfiltration risks (37%), and website (37%) and email breaches (36%) as the main factors driving “heightened anxieties” in Kroll’s 2025 Global Business Sentiment Survey.
The report found that relatively few leaders felt equipped to address those challenges. Fewer than half of respondents (45%) said they were “very prepared” to address cybersecurity and data privacy issues this year, and only 12% felt “extremely prepared” for global privacy laws as fragmented regulation adds further complexity.
EU respondents felt the least prepared for data privacy challenges — they are subject to “one of the most comprehensive data privacy frameworks”, the report said. Additionally, new US requirements, mainly on the state level, muddy the waters for companies operating internationally.
Less than half of concerned leaders have increased budgets, expanded teams, upskilled their workforce, or hired external experts to prepare for the cyber and data privacy challenges ahead, according to the report.
The report surveyed 1,200 executives from more than 20 countries in February.
AI governance gaps threaten compliance
Similar to concerns around data privacy regulation, global compliance requirements are also under threat from the use of AI outpacing governance.
While AI integration is expected to be one of the greatest business opportunities for the year ahead, governance gaps could be accompanied by significant operational challenges, the report warned.
More than nine in ten (93%) respondents globally have implemented AI; most believe AI will yield internal efficiencies (79%), deliver measurable return on investment (79%), and generate external efficiencies (76%).
Despite optimism, governance frameworks are lagging behind AI adoption, the report found. Of companies already using AI, 63% do not have AI transparency or explainability efforts in place, and 59% have not implemented any AI policies and guidance for employees.
“Future benefits hinge on strong AI governance practices,” the report said. “Such governance gaps could bring serious compliance challenges for businesses operating in jurisdictions with strict AI regulations.”
Economic pressures: Some leaders turn to M&A and restructuring
Economic pressures amidst pressing market challenges, particularly from tariff costs, continue to test companies, and some are planning to use merger-and-acquisition (M&A) and restructuring strategies to compete in a challenging business environment.
Amongst the one-third of respondents who identified geopolitical tensions as a significant business challenge, 37% cited tariffs as the top concern in that category. However, leaders expected economic instability (36%) and inflation (31%) to disrupt business operations even before the effects of US tariffs this year, the report said.
“While 70% of respondents say their financial health improved compared to last year … fewer than one in ten (9%) said they had full confidence in their company’s financial health,” the report said. Furthermore, only four in ten leaders said their organisation was “very prepared” to address budget challenges (39%) or debt service and financial risk (40%).
In response to financial concerns, 48% of respondents plan to pursue M&A deals in the next 12 months to meet growth targets (55%), improve their finances (52%), and expand into new markets (49%).
Fewer leaders (18%) are likely to restructure their business. Amongst the leaders pursuing that strategy, they’re concerned about issues arising with managing customer and client expectations (46%), securing financing and refinancing (36%), and regulatory or compliance hurdles (33%), the report said.
— To comment on this article or to suggest an idea for another article, contact Steph Brown at Stephanie.Brown@aicpa-cima.com.