Introduction

The nature of corporate risk in Australia is evolving rapidly at a strategic, reputational, and liability level. As the next five years shape up to be even more disruptive in the world of risk management, Australian boards need to begin paying swift attention not only to how artificial intelligence (AI) is going to reshape the risk environment itself, but also how AI can assist them in combatting and mitigating those very risks.

There have been several recent high-profile incidents which have underpinned the urgency of rethinking organisational approaches to risk in the age of AI.

Consulting firms have come under fire over revelations senior partners misused confidential Australian government information, leading companies to re-examine the risk nature of longheld partnerships both on a strategic and operational level. The introduction of mandatory climate reporting at the beginning of this year has catalysed a transformation in how risk itself must be understood, prioritised, and governed in Australia. It has opened up new potential litigations and regulatory actions if disclosures are misleading or insufficiently substantiated, and has the double whammy of revealing previously unquantified vulnerabilities in doing so.

A second law was introduced at the beginning of this year relating to risk. Starting 1 January 2025, intentionally underpaying employees became a criminal offence in Australia, with penalties including fines and imprisonment. This shift in the law aims to tackle the ongoing issue of wage theft and ensure fairer treatment of workers.

Australia’s risk landscape has traditionally been driven by financial and regulatory factors. Now, with climate and personnel-related financial disclosures being mandated, there’s a new convergence of environmental, social, governance (ESG) risk alongside the longstanding legal and financial risks. The subjectivity and uncertainty inherent in some of these new risk models adds complexity, requiring boards and executives to make risk-based decisions amid incomplete information, emerging standards, and shifting stakeholder expectations.

It also reflects a broader trend toward integrated, multi-dimensional risk management. Where risks could once be managed in operational silos, today’s environment demands cross-functional collaboration and board-level oversight.

By the time we factor in cybercrime and global geopolitical uncertainty, it begs the question — are Australia’s boards truly equipped to manage today’s risk landscape?

The reality is, risk needs to be rethought in the age of AI, and one of the only ways to do this is to accept that AI tools are no longer optional but essential in identifying and mitigating complex, fast-moving risks. Australian boards must move faster to adopt them.

How Risk Has Changed In the Age of AI

The growing adoption of AI across every aspect of Australian society has fundamentally shifted the risk profile for organisations. In addition to traditional risk management, businesses must now contend with an expanded set of challenges related to AI risk, including ethical concerns, data security, the potential for algorithmic bias, and intellectual property risks.

What makes this shift urgent as far as the board is concerned is that AI no longer sits solely within the IT function. It influences a vast range of organisational decision making across customer experience, operations, and legal. As AI increasingly shapes a broad array of industries — in particular financial services, healthcare, and the public sector — organisations must manage AI risks not just within their own operations but also within the broader ecosystem they operate in, to maintain public trust and shareholder confidence.

Traditional ERM Falls Short

Traditional enterprise risk management (ERM) tools are no longer fit for purpose in today’s fast-moving, interconnected risk environment. Manual reporting, outdated risk registers, and fragmented oversight leave organisations exposed, unable to proactively identify or respond to emerging risks like climate disclosures, cyber threats, and geopolitical volatility. Spreadsheet-based risk management processes fall short in identifying, assessing, and addressing critical risks. Without a structured, enterprise-wide framework, risks remain unmanaged or overlooked — leading to poor resource allocation, operational disruptions, reputational damage, and increased exposure to regulatory penalties, financial losses, and inefficiencies.

Many Australian businesses still lack mature ERM programs or consistent risk literacy at the board level. This results in risk management that’s reactive, siloed, and heavily reliant on spreadsheets — creating dangerous blind spots at a time when regulatory expectations and stakeholder scrutiny are escalating.

Promoting a culture of risk awareness ensures informed decision-making at every level and positions teams to act decisively in protecting the business and its reputation. To build organisational resilience and stakeholder confidence, companies need solutions that embed risk management into everyday operations. Australian initiatives like APRA’s CPG 229 on operational risk and ASIC’s increased cyber reporting requirements are only going to add to the pressing need to adopt AI-driven technologies.

Australian organisations that embrace AI-driven risk management now will not only protect themselves from emerging threats but also gain a competitive edge through sharper foresight, stronger governance, and enhanced stakeholder trust. The future of risk management in Australia won’t be about avoiding risk entirely, but about managing it with clarity, confidence, and the right technology in hand.