At the World Economic Forum Annual Meeting in Davos in January, Canadian Prime Minister Mark Carney’s sobering speech warned that “we are in the midst of a rupture, not a transition”. 

This sombre outlook was mirrored in the WEF’s Global Risks Report 2026, released a week prior to Davos. In it, 50 percent of some 1,300 global experts expressed a pessimistic world outlook over the next two years. The report named geopolitical, economic and technological risks as issues to watch for in the short term and warned that environmental concerns are being forced to take a back seat due to these more urgent concerns.

INSEAD faculty also highlighted many of these same trends in our annual survey conducted in late 2025. Over 60 faculty across all nine academic areas were asked to weigh in on two important questions: What are the top societal issues businesses should address in 2026? And what are the top societal issues that pose a threat to business? 

Like last year, our faculty identified geopolitical crises, social instability, income and wealth inequality and climate change as the leading business risks. But displacing 2025’s threat of inflation or recession is the double-edged sword of AI and digital transformation, which faculty saw as both a top threat and top opportunity for business.

Let’s take a look at the predictions for this year.

1. Geopolitical crises

For 2026, 64 percent of INSEAD faculty identified geopolitical crises as the leading threat to business, while 24 percent said it was a top area for businesses to address. Although the first number has changed little from 2025, the latter figure dropped 10 percentage points from last year, suggesting we might be seeing limits to what business can realistically do to mitigate these ongoing tensions and disputes.

Indeed, the world hasn’t seen this many armed conflicts since World War II. This is an especially troubling reality given that 2026 is a significant year for negotiating agreements around nuclear arms proliferation – the long-standing nuclear treaty between the United States and Russia expired earlier this month. New allegiances, shifting trading blocs and heightened strategic pressures are all adding to the complexities for businesses trying to navigate this new world order.

A number of faculty also recognised that the emergent capabilities of AI and quantum computing present an added layer of risk to an already complicated geopolitical landscape. The stage is set not just for economic competition, but potential hostile attacks. Chatham House warns that the integration of AI in military systems could lead to more accidents, while quantum computing advances could interfere with the protective encryption necessary for nuclear deterrence.

2. AI and digital transformation

Here at INSEAD, we are actively researching and educating future leaders on the impact of AI on business and society. This focus is reflected in the fact that over half of INSEAD faculty (61 percent) identified AI and related digital transformation as a leading area that businesses should address in 2026, while 44 percent said it was a key threat.

Of all the societal issues included in the survey, it seems that AI promises both the biggest growth opportunities as well as the biggest threats. This is due to both its transformative nature and applicability across critical areas including geopolitics and economics. 

The rise of AI will also widen existing social inequalities. At the geopolitical and geoeconomic levels, the lion’s share of global AI capabilities is held by just a few countries. AI inequalities will help advanced economies boost productivity at twice the rate of lower-income countries, while middle-income countries will work to reduce their dependence on AI superpowers. Amid all this jostling, the need for monitoring and regulation will gain urgency. 

There is also a mixed outlook when considering AI’s climate impact. The majority of business leaders believe that AI can accelerate their company’s sustainability efforts. At the same time, experts fear that the technology’s substantial energy and water demands could undo the emissions cuts already achieved by the business sector.

3. Social instability

Social instability remains a risk for business in 2026, with 29 percent of INSEAD faculty identifying it as one of the key threats, and just 14 percent counting it among the top opportunities for business.

The WEF report echoes this concern, listing societal polarisation as one the top three threats over the next two years and warning that even stable democracies are at risk. The “streets vs. elites” narrative is growing prevalent, and, as highlighted in the latest Edelman Trust Barometer, populations in many countries are losing faith in institutions and governance. Unequal economic opportunity is fuelling polarisation, causing low- and middle-income earners to become more insular and disillusioned. 

AI will play an increasing role in stoking such polarisation, especially as the WEF report cites misinformation and disinformation as major risks in the short term. Moreover, a recent survey by the Reuters Institute showed that 58 percent of respondents were concerned about distinguishing real and fake online news. The creation of deepfakes has become easier and cheaper, with the technology already playing a part in important recent elections. 

Understanding the impact of AI on different aspects of society is a key focus of research at INSEAD. Nobel Prize winner Philippe Aghion and fellow professor Alexandra Roulet exemplify this through their work examining AI’s potential impact on productivity. Indeed, further down the line, AI automation could disturb labour markets faster than regulatory responses, causing not just job loss but a loss of identity and meaning. This could add another layer to the problem of social unrest.

4. Income and wealth inequality

Global inequality remains a significant issue in 2026, with 17 percent of faculty considering it a top threat and 31 percent identifying it as a key opportunity area for business.

According to the World Economic Situation and Prospects 2026 report by the UN Department of Economic and Social Affairs (DESA), the global economy has proven resilient against the disruptions of the previous year, but growth and vulnerabilities are distributed unevenly. Global economic growth will decline slightly to 2.7 percent, slightly less than the 2.8 percent estimated for 2025, and well below the pre-pandemic average of 3.2 percent. 

The World Bank’s Global Economic Prospects report zooms in on the disparities underlying these numbers: Although 90 percent of advanced economies now have per capita incomes above pre-pandemic levels, over a quarter of what the report classifies as “emerging-market and developing economies” still have per capita incomes below 2019 levels. On the ground, this means that low-income households, rural communities and women are disproportionately shouldering the burden of cost-of-living pressures, according to DESA.

Although these trends aren’t new, they deserve continued attention. The Edelman report revealed that high- and low-income populations are living in “opposing institutional realities”. High-income respondents, for instance, are more likely to find governments, non-governmental organisations (NGOs), media and businesses to be ethical than low-income respondents. 

This divide is hugely consequential because it impacts several other global risk factors. In fact, the WEF report identified inequality as the “most interconnected” risk because of how it’s affected by other aspects such as climate change and AI.

5. Climate change

The urgency of climate change as both a business threat and an area of growth dropped slightly this year. A total of 41 percent of INSEAD faculty saw climate change as a top area for business to address, compared to 50 percent last year, while only 17 percent saw it as a top business threat (down from 26 percent). This change is likely to reflect the acute urgency of other issues, rather than any improvement in the climate change landscape.

In fact, while geopolitics, disinformation and polarisation are also identified in the WEF report as the top short-term risks (two-year horizon), the top three long-term risks (10-year horizon) are extreme weather events, biodiversity loss and ecosystem collapse, and critical change to Earth systems. Many climate scientists and policy experts, including at the UN, believe that the 1.5°C limit is now impossible to achieve.

Despite shifting global priorities, INSEAD remains steadfast in its commitment to developing sustainability-minded business leaders. Our renewed MBA curriculum gives sustainability prominence across both core and elective courses. Whatever the current sentiments, an understanding of sustainability issues and how to recognise the business opportunities they present will remain essential for business leaders now and in the future. 

INSEAD’s response to global trends

Although the outlook for 2026 is concerning, the role of business remains critically important, perhaps more so than ever. 

The Edelman report insists that even amid the current crisis of trust, the business sector can make things better. Compared with governments, NGOs and the media, business continues to be viewed as the most competent and ethical, which puts business leaders in the unique position of being “trust brokers” in a world where trust is increasingly insular. 

How can leaders best prepare for such a responsibility, and what role should business schools play?

Despite the current retreat into geopolitical mistrust and protectionism, our mission at INSEAD continues to be bringing together people, cultures and ideas to have important conversations about the world we live in, and the type of society we want to build. This is illustrated by our recent participation at Davos – featuring our largest ever delegation of faculty – where we engaged with global leaders to tackle pressing questions around responsible leadership, social innovation and the climate crisis.

What’s more, underscored by the school’s commitment to cultural diversity, our curriculum upholds collaboration across four locations in Europe, Asia, the Middle East and North America, as well as with global alliances. This makes us well-placed to prepare current and future business leaders for the demands and opportunities of this turbulent geopolitical moment.

Addressing the threats and potential of AI is a big part of helping business leaders create trust. INSEAD’s newly founded Human and Machine Intelligence Institute (HUMII) is dedicated to conducting research into the responsible and human-centred use of AI in business. Since 2025, HUMII has convened multi-campus AI Forums and launched cross-disciplinary research initiatives, while the school is now actively integrating AI content across our various curricula.  

Businesses have a large part to play in shaping the emerging era. This will require developing business leaders who possess not just the expertise but also the emotional intelligence and the ethics to transform society. At INSEAD, we remain optimistic about the quality of that leadership.