5 January 2026
- 63% say new technologies the number one concern for 2026
- 61% say new technologies the number one concern for the next 3-5 years
- 59% say the impact of new technologies is their number one social concern, out-ranking housing affordability
AI related issues have emerged as the number one challenge facing Australian business leaders for the year ahead and beyond, according to KPMG Australia’s annual Keeping us up at Night survey.
For the first time, the survey of 274 C-Suite executives and board members across a range of industries found concerns linked to AI and associated technologies were named as the top three challenges for the next 12 months, while inflation was less of a priority. Concerns around inflationary cost controls and talent sourcing and productivity have dropped down the list.
The most significant top rankings of AI and technology challenges and concerns were consistent across the larger corporate, ‘top end of town’ cohort, ($500+ million revenue) - and mid-market respondents. However, there was a noticeable difference elsewhere, indicating a more positive outlook in the mid-market. Cost control ranked 5th for the larger corporates versus 9th for the mid-market, while identifying future markets (growth) ranked 6th for the mid-market versus 11th for the top end of town.
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. Digital transformation and optimisation came in second, while cyber security risks remain in the top three again this year.
| Top 5 challenges in 2026 survey | Top 5 challenges in 2025 survey |
|---|---|
| 63% – New technologies, including AI, and the use cases and ethics that arise when implementing | 53% – Digital transformation and optimisation and extracting organisational value from it |
| 54% – Digital transformation and optimisation and extracting organisational value from it | 42% – Protecting and dealing with cyber risks |
| 42%– Protecting against and dealing with cyber risks | 39% – Cost controls in an inflationary environment. |
| 37% – Dealing with evolving regulatory processes, reporting changes and impacts | 39% – New technologies, including AI, and the use cases and ethics that arise when implementing |
| 35% – Driving productivity growth from existing capital and labour | 38% – Dealing with evolving regulatory processes, reporting changes and impacts |
Overall, the top issues for the next 3-5 years were all AI related, with new technologies, digital transformation and optimisation and the need for greater agility and flexibility rounding out the top three concerns, closely followed by cyber risks and growing future markets.
| Top challenges in the next 3-5 years – 2026 survey | Top challenges in the next 3-5 years – 2025 survey |
|---|---|
| 61% – New technologies, including AI, and the use cases, issues and ethics that arise when implementing. | 53% – Digital transformation & optimisation and extracting organisational value from it. |
| 47% – Digital transformation & optimisation and extracting organisational value from it | 48% – New technologies, including AI, and the use cases and ethics that arise when implementing. |
| 43% – The need for greater agility and flexibility in your organisation to meet opportunities and challenges | 46% – Identifying & growing future market segments and/or innovation opportunities for growth |
KPMG Australia CEO Andrew Yates said: “Australian businesses are now more aware than ever of the challenges and opportunities of new technologies, both in the short term and beyond. It’s significant that leaders ranked AI-related issues as their top concern for the first time - not just for 2026, but for the next 3-5 years.” He added: “This is clear recognition that AI is here for the long haul and businesses that get ahead of the game and embed it into their overall strategy now will be well ahead of those that don’t.”
KPMG Australia Chief Economist Dr Brendan Rynne said: "Perhaps, unsurprisingly, more than a third of leaders identified driving productivity as a key challenge for them for the year ahead. Unfortunately, we’ve been witnessing sliding productivity for several years now and seeing the weight put on this challenge by our respondents only reinforces the legitimacy of this issue in 2026.”
Social issues impacting business
Although absent in last year’s survey, ‘AI and the impact of new and disruptive technologies’ has also risen to be the top social issue. Concerns around housing supply and affordability and addressing skills gaps continued to worry Australian business leaders.
| Top societal issues for business – 2026 survey | Top societal issues for business – 2025 survey |
|---|---|
| 59% – Social impact of new & disruptive technologies, such as AI, autonomous vehicles, Internet of Things, biotechnology, and a different physical world | 48% – Meeting the challenges of housing availability and affordability |
| 52% – Meeting the challenges of housing availability and affordability | 48% – Preparing for a future skills gap – technology, data scientists, health workforce shortfall |
| 49% – Preparing for a future skills gap – technology, data scientists, health workforce shortfall | 47% – Geopolitical disruptions and shifting levels of regional/global tension and cooperation |
Andrew Yates also noted that the "Keeping us up at night" survey was conducted prior to the Bondi terror attack and this timing could mean that the social issue priorities of leaders may have changed since then.
Other issues
Stalling consumer confidence slid right down to the third lowest issue concerning leaders for the coming year, the largest drop in the list of challenges. Concerns around the need for businesses to chase new markets and be innovative to capture growth has also fallen by around a third compared to last year.
Notably, business leaders are much more optimistic about capturing opportunities from a rising market, and they are also less concerned about supply chains, geopolitical tensions and inflation.
About our survey
KPMG Australia surveyed respondents between 23 October and 21 November 2025. We received a total of 274 valid responses. Respondents were a mix of C-Suite executives and board members from a range of industries and specialisations across the private and public sector.
For further information
Marjorie Johnston
KPMG Corporate Affairs
0407 329 430
mjohnston4@kpmg.com.au
