Australia’s retail sector is at a pivotal moment in artificial intelligence adoption: most leading brands are racing to pilot generative AI initiatives, yet a substantial share remain hesitant, prompting warnings from risk leaders about falling behind competitors. A new report, Turning Hesitation Into Action: How Risk Leaders Can Unlock AI’s Potential, released by the Governance Institute of Australia in partnership with Cisco, revealed that risk management hesitation is both a twin ba
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Australia’s retail sector is at a pivotal moment in artificial intelligence adoption: most leading brands are racing to pilot generative AI initiatives, yet a substantial share remain hesitant, prompting warnings from risk leaders about falling behind competitors. A new report, Turning Hesitation Into Action: How Risk Leaders Can Unlock AI’s Potential, released by the Governance Institute of Australia in partnership with Cisco, revealed that risk management hesitation is both a twin barrier and an opportunity now shaping AI’s future in retail.AI’s promise vs organisational paralysisDespite the rapid development of generative AI and strong growth in pilot programs, the sector is far from unified in its embrace of the technology. According to the report, as of November 2025, 17 per cent of ANZ retailers reported no plans to use AI at all – a figure indicative of how caution and “paralysis” are impacting decision-making. While a majority are experimenting with AI applications, just 9 per cent trust such systems to manage the full customer journey, highlighting widespread uncertainty around risks such as data privacy, ethical oversight and brand reputation.This climate of caution comes as shoppers become more aware, and sometimes sceptical, of retailers’ use of data-driven tools. Retailers are trying to balance an urgent need to innovate against reputational and operational risks, causing investment to lag behind more aggressive international rivals.Adopting a strategic, risk-led approachHowever, the Cisco and Governance Institute report identified risk management as both the greatest hurdle and the strategic lever for unlocking AI’s potential in retail. The research in the report relied on industry roundtables, held under Chatham House rules, where risk leaders from retail, banking, and other sectors detailed the challenges of piloting, scaling, and governing AI. “I have spent a lifetime trying to encourage people to take a risk intelligently,” said one senior risk professional, underscoring that risk officers are often excluded from AI strategy, but must now become central to the process.Key barriers were outlined as follows:Ethical and reputational concerns, especially around biased or incorrect AI outputsSecurity and privacy fears related to data misuse or breachesOperational and strategic risks – high costs, unclear ROI and scaling issuesThe existential risk of falling behind competitors who move faster“AI represents the single greatest challenge and opportunity that we have seen this century. Its potential is immense, but the path to success is neither straightforward nor guaranteed,” Carl Solder, Cisco’s chief technology officer, stated.“What is clear is that organisations that move quickly to build knowledge and capability will be best placed to reap the rewards. For Australian organisations, that journey must begin now.”With new data from the AI Readiness Index showing Australian businesses self-identifying as “pacesetters” climbing from 4 per cent in 2024 to 22 per cent in 2025, momentum is building – but so is the demand for rigorous governance around AI.Six actionable steps for retail risk leadersThe Turning Hesitation Into Action: How Risk Leaders Can Unlock AI’s Potential report is a playbook for CROs and risk owners seeking to break the organisational hesitation. The report recommends:Building knowledge – closing the AI skills gap to enable intelligent risk mappingCreating an interdisciplinary AI Governance Committee linking risk, tech, and strategy leadersEmbedding AI within core business strategies to prevent “strategic drift”Investing in controls – policy, sandbox environments, and robust security frameworksRaising AI awareness across the workforce, including education on both threat and opportunityMeasuring and learning from AI project results to guide future investmentsRetail risk professionals are increasingly tasked with translating technical risk into business action and establishing guardrails – such as ISO or NIST frameworks – that align innovation with compliance. The imperative is for the organisation to be educated about AI, its risks, and its impact on roles and the retail workforce.A critical opportunity or missed advantage?As more Australian retailers experiment with generative AI for customer personalisation, supply optimisation and fraud detection, the message is clear: those who hesitate to build risk-ready AI strategies risk irrelevance and lost productivity. “Staying still means falling behind in the productivity race,” warned a roundtable participant.With the right governance structures and a proactive approach to risk, Australian retail can accelerate safe, meaningful AI adoption and unlock new value for both businesses and consumers alike. The critical challenge – and opportunity – now is for risk leaders in retail to step up and transform hesitation into productive action that safeguards trust while delivering innovation.Further reading: Why Walmart’s partnership with OpenAI could transform retail.
