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An unsettled regulatory and legal environment is chief among the headline concerns for businesses for the first three months of this year, offering pertinent lessons for law departments.
Headline risk
A recent survey of 266 senior risk and assurance executives, conducted in the first quarter of this year, Gartner found that the unsettled regulatory and legal environment, which is marked by increasing compliance complexity and costs due to regulatory authority changes, was the most-cited identifiable risk for businesses at this point of 2025.
In addition to the unsettled regulatory and legal environment after the US election, Gartner outlined in a statement, Europe and other regions are preparing for consequential elections that could also reshape regulatory landscapes.
“These political transitions carry the potential to redefine compliance frameworks, posing challenges for businesses striving to adapt to new legal realities,” the firm said.
“Adding to the complexity is the divergent approach to artificial intelligence (AI) regulation across regions. While some governments champion AI innovation through flexible regulatory measures, others intensify scrutiny, complicating the compliance landscape for companies operating globally.”
This “regulatory tug of war”, Gartner posited, leaves businesses grappling with the challenge of aligning their AI strategies with disparate legal requirements.
Additional risks
Other headline concerns identified by those surveyed include AI-enhanced malware, IT vendor criticality, tariff and trade policy uncertainty, and information governance-driven AI risks.
Speaking about the findings, Gartner’s director of research in its risk and audit practice, Gamika Takkar, said: “The global political arena is seeing transformative shifts, driven by elections that have ushered new governments into power across key economies, making the issue one that executives want to better understand and address before they face real consequences.”
The findings are particularly interesting in the context of a recent report from Axiom, which found that almost 80 per cent of in-house legal heads are worried about increased risk following unprecedented regulatory, policy and business uncertainty. The report revealed that four in five leaders in-house are concerned about increasing risks, as well as a “perfect storm” of policy, economic, and business disruptions. Moreover, 41 per cent also reported that their organisations are currently confronting “high” or “extremely high” legal risk.
These are not the only business risks that law departments must contend with.
As reported by Lawyers Weekly, a wave of attrition may soon hit Australian law departments, and further regulatory scrutiny and subsequent litigation is expected about psychosocial risks in workplaces across the country.
In assessing a business’s risk exposure and in determining how best to navigate policy uncertainty, Gartner suggested that businesses should assess their risk exposure in four critical areas: trade, tariff, and supply chain disruptions, regulatory and legal volatility, the shifting geopolitical landscape, and immigration and workforce changes.
Such determinations will undoubtedly require significant input from the law department.
Businesses, Takkar mused, “can better position themselves to adapt to these emerging threats by prioritising potential disruptions and shifting resources to mitigate risks”.
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Jerome Doraisamy is the managing editor of Lawyers Weekly and HR Leader. He is also the author of The Wellness Doctrines book series, an admitted solicitor in New South Wales, and a board director of the Minds Count Foundation.
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Jerome Doraisamy
