More than six in ten Australian business leaders now rank new technologies — especially AI — as their top concern, according to KPMG’s latest Keeping us up at night survey. That figure has climbed sharply in just a few years, and it tells you something about the pressure business owners are under. The question isn’t whether to adapt anymore — it’s how to do it without breaking the business in the process. Here’s what you actually need to know.
These aren’t abstract worries. They translate into real decisions about where to spend money, who to hire, and what systems to trust. If you’re running a business in Australia right now, you’re probably feeling at least two of these pressures at once. Digital tools can help, but knowing which ones actually work for your situation is the hard part. A practical business planning notebook can help you map out priorities before committing to expensive software.
What business agility actually means in practice
You hear the word “agility” a lot in business circles. But when 43% of leaders say they need greater agility and flexibility to meet future challenges, it’s worth asking what that looks like on the ground. It’s not about being able to pivot overnight. It’s about having systems and teams that can absorb change without grinding to a halt.
What I tend to notice is that businesses that invest in flexible processes — rather than rigid, one-size-fits-all software — tend to handle disruption better. The KPMG data backs this up: the same leaders who worry about technology also worry about productivity growth from existing capital and labour (35%). That’s a direct link between agility and performance. Strong leadership during tough times often comes down to how well you’ve prepared your operations to flex.
Why these challenges matter for your bottom line
The social impact of new and disruptive technologies concerns 59% of business leaders. That’s not just a philosophical worry — it affects hiring, customer trust, and regulatory risk. When 49% of leaders are preparing for a future skills gap, particularly in technology and data science, you can see how these challenges compound. You can’t adopt AI if you can’t find the people to manage it.
Housing affordability also made the list, with 52% of leaders citing it as a social issue affecting the business environment. That might seem unrelated to your daily operations, but when your employees can’t afford to live near your workplace, retention becomes a problem. The cost of living pressures that started with inflation — which was less of a priority this year than in previous surveys — have now shifted into structural issues like housing and skills.
One thing I’ve observed is that businesses that treat these as interconnected problems — rather than separate issues — tend to find more practical solutions. A cybersecurity awareness poster for the office won’t solve your tech talent shortage, but it’s a small step toward building a culture that takes digital risks seriously. Rising overheads only make these decisions more urgent.
Where businesses get stuck when adapting to change
The KPMG survey reveals a pattern: the same challenges appear at the top of both the short-term and long-term lists. That suggests many businesses are stuck in a cycle of reacting rather than planning. Here are the most common traps.
Treating technology adoption as a one-off project
Too many businesses buy a new software platform, train staff once, and assume the job is done. But 54% of leaders say extracting value from digital transformation is a top concern. That’s because technology needs ongoing investment in training, integration, and iteration. A platform that worked last year may not work next year. The fix is to build continuous review cycles into your operations — quarterly check-ins on whether your tools still fit your needs.
Ignoring the ethics and governance of AI
AI isn’t just a technical challenge. 63% of leaders cite the use cases and ethics of AI as a concern. Businesses that rush to deploy AI without clear policies on data privacy, bias, and accountability often end up creating more problems than they solve. The remedy is to establish a simple AI governance framework before you start: who owns the data, how decisions are reviewed, and what happens when something goes wrong.
Underestimating cyber risk until it’s too late
42% of leaders rank cyber risk as a top concern, yet many small and mid-market businesses still treat cybersecurity as an IT issue rather than a business risk. A single breach can halt operations for days or weeks. The practical fix involves regular staff training, multi-factor authentication, and a clear incident response plan. Document who does what if a breach occurs — and test that plan at least once a year.
Waiting for regulation to settle before acting
37% of leaders worry about evolving regulatory processes. But regulation rarely settles. It shifts with each new government priority or industry scandal. Businesses that wait for clarity before making changes often fall behind. A better approach is to build compliance flexibility into your systems from the start — modular processes that can adapt to new rules without a complete overhaul.
→ Scroll right to see all columns
| Challenge | Short-term priority (2026) | Long-term priority (3–5 years) |
|---|---|---|
| New technologies and AI | 63% | 61% |
| Digital transformation | 54% | 47% |
| Cyber risks | 42% | Not separately ranked |
| Regulatory changes | 37% | Not separately ranked |
| Agility and flexibility | Not separately ranked | 43% |
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How to build a practical adaptation plan for your business
Adapting to change doesn’t mean overhauling everything at once. The businesses that handle disruption best tend to follow a structured approach. Here’s what that looks like in practice.
Audit your current technology stack
Start by listing every piece of software and hardware your business relies on. For each one, ask: is it still fit for purpose? Does it integrate with other tools? Are staff actually using it? The KPMG data shows that 54% of leaders struggle to extract value from digital transformation — often because they’ve accumulated tools that don’t work together. A simple spreadsheet audit can reveal redundancies and gaps. Excessive procurement costs often come from paying for tools you don’t fully use.
Build a skills roadmap for your team
With 49% of leaders worried about a future skills gap, waiting to hire until you need someone is risky. Instead, map out the skills your business will need in two to three years — data analysis, AI literacy, cybersecurity basics — and start developing them now. That might mean training existing staff, offering certifications, or restructuring roles to attract different talent. A project management planner can help you track training milestones and budget for development costs.
Create a simple AI governance policy
You don’t need a legal team to write an AI policy. Start with three questions: what data are we feeding into AI tools, who reviews the outputs, and what happens if the AI makes a mistake? Document the answers in a one-page policy that every team member can understand. This directly addresses the ethics concern that 63% of leaders flagged. The goal isn’t perfection — it’s having a clear position before a problem arises.
Set up quarterly review cycles
Adaptation isn’t a one-time event. Block out four hours every quarter to review your challenges against the KPMG categories: technology, digital transformation, cyber risk, regulation, and agility. Ask what’s changed since last quarter and what needs to shift. This habit alone can prevent the reactive cycle that keeps many businesses stuck. Inflation pressures may ease, but the need for regular review doesn’t.
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1Audit your current tools and processesList every system you use, note what it costs, and flag anything that’s underused or outdated. This gives you a baseline before making changes.
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2Identify your top three skill gapsLook at where your team is weakest relative to the challenges you face — AI literacy, cybersecurity awareness, or data analysis are common starting points.
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3Write a one-page AI governance policyCover data use, output review, and error handling. Keep it simple enough that everyone in the business can follow it.
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4Schedule quarterly adaptation reviewsPut recurring calendar blocks to assess what’s changed and what needs adjusting. Consistency matters more than depth.
Frequently asked questions about adapting to business challenges
How do I know which challenge to tackle first? ▾
Do I need to invest in AI right now? ▾
What’s the biggest mistake businesses make with digital transformation? ▾
How can a small business afford to adapt to these challenges? ▾
Is the skills gap going to get worse? ▾
How often should I review my business strategy? ▾
Adaptation is a process, not a destination
The businesses that handle change best aren’t the ones with the biggest budgets or the most advanced technology. They’re the ones that build regular review cycles, invest in their people’s skills, and treat adaptation as an ongoing process rather than a crisis response. The KPMG data makes one thing clear: the challenges aren’t going away, but the businesses that plan for them systematically are the ones that come out ahead. If this was useful, you might also want to read Weak regulatory adaptation hurts businesses in Australia.
Sources and Further Reading
How rising costs affect Australian companies — A closer look at how cost pressures interact with the technology and regulatory challenges covered here.
Challenges of poor influencer marketing ROI in Australia — Explores how marketing investments can go wrong when digital transformation isn’t aligned with strategy.
KPMG (2025). Keeping us up at night: 8th edition. 🔗
