Over a third of PE portfolios have been significantly impacted by cyber security, sustainability, regulatory, or geopolitical risks in the past three years, finds S-RM

• Between 34% and 58% of PE portfolios have been significantly impacted by cyber security, sustainability risks, regulatory instability, and geopolitical risks over the last three years
• 72% of investors view non-financial risks as being “extremely important” or “very important” in their pre-investment decision-making, reflecting an intensification of operational and strategic risks in recent years
• Despite viewing geopolitical risk as a top concern, just 17% of investors use scenario mapping to assess exposure, leaving some portfolios vulnerable to sudden regulatory or political shifts 

London, 23 October 2025 – Over a third of PE portfolios have been significantly impacted by cyber security, sustainability, regulatory, or geopolitical risks in the past three years, according to the 2025 Investor Sentiment Report: Forces of Change, published today by global corporate intelligence and cyber security consultancy S-RM.

The findings show how investors are having to navigate an era of intensified operational and strategic risks – with 72% acknowledging the growing importance of non-financial risk.

Regulatory and geopolitical uncertainty rank among the top five non-financial risk factors (see table) impacting portfolio companies during the holding period. Both risk vectors also contribute to deal failure – 60% and 59% respectively, topped only by cyber security (67%). They also feature among the three leading non-financial risks affecting exits (73% and 70%, respectively) underscoring how volatility in these areas can impact value across the entire deal cycle, from entry through to divestment.

Action fails to match concern in certain key areas

Despite these challenges, only 17% of investors reported to use scenario mapping or political stress-testing to assess future disruptions. Meanwhile, just 18% actively monitor political sentiment or conflict during a transaction process, suggesting that many remain reactive rather than prepared when risks materialise.

Similarly, 60% of investors identified cyber security as a non-financial risk area that has increased in importance over the last years. However, less than three quarters of respondents reported using key tools to identify cyber risk during a transaction process.

From ‘known unknowns’ to ‘iceberg’ risks – investors expect dynamic risk environment to continue

In addition to illustrating how operational and strategic risks have changed in recent years, the report also showed how investors expect them to evolve.

• Over 80% of investors expect cyber security, war and conflict, corruption, and geopolitical risks to increase or stay the same over the next three years
• Investors identified cyber security as the risk area most likely to accelerate, with 55% of respondents expecting it to increase
• Risks related to the rapid adoption of generative artificial intelligence (‘AI’) were identified as the next frontier for risk owners within the dealmaking ecosystem. Investors expressed concern about regulatory issues, data governance, AI-enabled cyber-attacks, and the potential for AI-generated deepfakes or synthetic media to impact reputation

 Ian Massey, Head of Corporate Intelligence, EMEA at S-RM, said:

Investors are having to adapt to novel risks in a rapidly changing environment. We’re seeing geopolitical or regulatory factors shift mid-deal, trade routes disrupted overnight, and ever-increasing focus on reputation and integrity. Disruption has without doubt created new investment opportunities – and certain sectors are flourishing – but the link between effective risk management and value creation is stronger than ever.”

The findings show while traditional due diligence remains essential for risk discovery, deal teams increasingly need to model for unexpected changes in legislation, sanctions, or policy, to avoid leaving portfolios vulnerable to shocks that are increasingly common in today’s investment environment.

Massey added:

Competitive advantage in dealmaking will come from foresight. Scenario planning and stress-testing assumptions are becoming as fundamental as financial or operational due diligence. Intelligence-led insight is now critical to unlocking, protecting, and growing value.”

The full report, 2025 Investor Sentiment Report | Forces of Change: How deal teams can thrive in an age of instability, is available to download here: https://www.s-rminform.com/investor-sentiment-report-2025