Leading risk factors for New Zealand businesses

Risk factors on the minds of New Zealand business leaders

While all the risks mentioned in the global report have some relevance to New Zealand organisations, we’ve identified the eight risk factors of most concern to local business leaders in 2025, along with tips to help address them.

 Regulations and compliance

Regulatory requirements for companies are increasing globally, and New Zealand businesses are not exempt. Laws and regulations can seemingly change overnight, creating an expensive and time-consuming environment for businesses as they scramble to keep up. 

In New Zealand, we’re seeing heightened levels of compliance risk, where businesses fail to adhere to certain rules and regulations, often inadvertently. An example of this is where two companies have a contract with each other and one company suspects the other is not upholding that contract. Not only does this lead to relationship damage between the two companies, but it’s a considerable legal and financial hurdle, often requiring an external third party to come in to assess the fallout. Non-compliance can result in reputational damage, data breaches, loss of revenue, legal implications and organisational shutdowns, so it’s essential for business owners and leaders to keep a watching brief on the rules and regulations impacting them.

 Fraud

Fraud is on the rise in New Zealand. It’s our country’s most prevalent and fastest growing crime type, according to the Government’s Serious Fraud Office, with factors such as financial pressures and technological disruption contributing to the heightened risk. While cyber-driven fraud is common, we’re also seeing many instances of more traditional fraud cases. Even in successful, established businesses there are cases where leaders have extended significant trust and autonomy to longstanding senior staff members, only for those staff members to take advantage of those leaders becoming less vigilant.

When it comes to fraud and your business, it’s essential to have the right checks and balances in place to ensure bad habits can’t creep in. No matter how much you trust your team, complacency can leave the door open to opportunism.

 Geopolitics

Geopolitical tensions have escalated in 2025, thanks to US President Donald Trump’s international tariffs, tensions in the Middle East and the ongoing war between Russia and Ukraine. While this situation may feel especially urgent right now, the global risk environment has been in flux for more than a decade. As a small nation somewhat removed from many of these situations, New Zealand can’t necessarily change the outcome of these geopolitical crises – but we are influenced by them.

What’s key when thinking about geopolitical tension is to perform risk assessments based on different scenarios – for example, further fuel price fluctuations or supply chain disruption – and make appropriate contingency plans. New Zealand businesses will have learned some of this during the Covid pandemic. Think of the factors that were especially problematic then and how they can inform your preparation for future events.

 Talent and people

The global risk report shows the people problem is high on the agenda for business leaders in 2025, and we are seeing that play out in New Zealand. Record numbers of people are leaving the country, leading to recruitment and retention struggles for many sectors, particularly those looking for skilled or senior talent. AI may also be exacerbating this risk factor. The automation of more manual tasks means new employees might now not be exposed to as much training and on-the-ground learning, potentially stripping away institutional knowledge that can help identify and protect against risk.

As the New Zealand economy improves and more opportunities become available for businesses, it’s important they have their house in order – including having the right people onboard – to maximise those opportunities while minimising risk.

 Environment

Environmental risk has been on the agenda for years, playing out for many New Zealand businesses through the adverse weather events of 2023. Business leaders know this is an area that needs attention, but as other risks emerge – alongside the challenging operating conditions presented by New Zealand’s slow economy – the urge to act on climate and environmental risks may be waning. 

Regulations and compliance continue to serve as key drivers of climate-related behavioural change for many business leaders. As the international ESG regulatory landscape evolves, New Zealand businesses should remain agile when it comes to their environmental compliance strategies and have contingency plans in place for any future weather events.

Our February 2024 BDO Risk Landscape Report explores environmental and climate risks in more detail.

 Cyber crime

Cyber crime is a longstanding risk for businesses in New Zealand and overseas, and the seemingly unstoppable rise of AI will likely intensify this. While AI can be used to benefit businesses, it can also be exploited; examples include using AI-driven deepfake technology to impersonate people’s appearances and bypass verification resources, along with using AI to create more personalised and widespread cyber attacks.

The first quarter of 2025 has seen a significant rise in financial losses due to cyber incidents in New Zealand, according to Cert NZ. With phishing (email cyber crime) and vishing (fraudulent calls or voicemails) on the rise in New Zealand, business leaders must remain vigilant and keep one eye on the horizon for emerging and evolving threats. 

 Competition

Increasing competition is one of the risks organisations are most unprepared for, according to the BDO Global Risk Landscape Report. This is reflected at a local level; as New Zealand’s economy continues its slow recovery, we can expect to see heightened market competition.

The May 2025 BDO Business Wellbeing Index shows improved business performance sentiment for New Zealand business leaders and indicates that growth is now back on the agenda. This improving outlook may lead to some business leaders developing an increased appetite for risk, resulting in more investment, business growth and new market entrants that will ultimately boost competition. While this is positive for consumers and our overall economy, it does present challenges for business leaders who will want to remain top of mind for customers in a more crowded marketplace. To do this, they’ll need to seek out new opportunities and become bolder. This will involve moving away from the compliance-driven approach to risk we’re currently seeing and taking on a more proactive, risk-welcoming stance.

 Technology

Technological changes and developments present both opportunities and risks for businesses. The most obvious example is the rise in AI. The global report shows that while more business leaders see AI as an opportunity than a risk, the rapid and ready availability of AI is creating blind spots in terms of risk management. 

Used effectively, AI can alleviate some of the people and talent risks currently facing business leaders. The May 2025 BDO Business Wellbeing Index shows workload demands are a leading issue for business leaders, and with a rising number of long-term departures from New Zealand, companies may come under increasing strain when it comes to recruiting and retaining the right people. AI tools present a massive opportunity to improve productivity and efficiency, often for very little investment – but companies must tread cautiously. Used ineffectively or maliciously, AI can open businesses up to data breaches, negligence and quality claims, cyber security threats and fraud.

Taking a proactive approach to risk management

While the New Zealand risk environment remains complex and evolving, there are positive signs on the horizon. At BDO, we’re seeing many clients increasing their proactive risk management posture, implementing more checks and balances to ensure they’re doing the right thing and are as prepared as possible for future risk. These are companies that haven’t necessarily experienced major risk events yet but simply want to remain on top of their risk profile. This is a positive step and something we encourage all Kiwi businesses to consider – not just as part of the risk management function, but as an essential component of running a business.

Proactive steps business leaders can take to improve their risk outlook include:

• Run regular cross-functional risk workshops to identify emerging threats and align mitigation strategies across departments.
• Develop a real-time risk dashboard that tracks key indicators such as compliance status, cyber threats and operational disruptions.
• Integrate risk into strategic planning by embedding risk assessments into investment decisions, growth initiatives and transformation programmes.
• Establish a clear risk appetite statement to guide decision-making and ensure alignment between leadership, governance and operational teams.
• Conduct internal audits and control reviews to identify gaps and strengthen assurance across financial, operational and compliance areas.
• Create a culture of risk awareness by encouraging open dialogue, sharing lessons learned and celebrating proactive risk management.
• Invest in scenario planning and stress testing to prepare for high-impact events such as supply chain disruptions, climate incidents and geopolitical shifts.
• Use external benchmarking to compare your risk posture with industry peers and identify areas for improvement.
• Empower teams with training and tools that help them identify and respond to risks in real time - especially in areas like cyber security and fraud.
• Engage with trusted advisors when navigating complex or unfamiliar risk areas, such as regulatory change, ESG compliance, or digital transformation.

Risk as a lever for growth

The global risk report shows that many companies are now taking a more defensive approach to risk management. This can become a problem. When companies adopt a compliance-first rather than risk-first mindset, they’re in danger of missing out on critical growth opportunities. For business leaders to develop an effective risk management mindset, they need to strike a balance between taking a compliance-based attitude to risk and actively seeking out risk to drive organisational success.

How BDO can help

BDO New Zealand's Risk Advisory service can help you to better understand your current risk profile, develop a proactive risk management strategy and prepare for any future risk events. We can provide you with a range of advice, including:

• Risk management, governance, and strategy
• Fraud risk and assessments
• Process design and improvement
• Controls assurance and compliance
• Regulatory matters.

Learn more about our BDO Risk Advisory services here, or get in touch below to see how we can help.

To discover what’s on the minds of New Zealand business leaders, view our latest BDO Business Wellbeing Index here.