As finance professionals view geopolitical instability as a major variable in economic risk globally, confidence dropped close to pandemic-era lows in early 2026.
This is the findings of the latest Global Economic Conditions Survey (GECS) from the Association of Chartered Certified Accountants and the Institute of Management Accountants, highlighting that pressures are building across the global aconomy amid the conflict in the Middle East.
In the Asia Pacific region, 33% of respondents saw geopolitical instability as a top risk priority for the first quarter of 2026, mirroring a growing need among finance leaders to address and prepare for mitigation.
Sharath Martin, senior policy & insights consultant at ACCA Asia Pacific, believes CFOs in the strongest position are those monitoring these indicators in real time, not waiting for quarterly reporting cycles to surface what the data clearly shows.
To better leverage internal financial data—such as cash flow trends and demand signals—as early warning systems for economic downturns, finance leaders are now tasked to device structures to act on insights such as these quickly.
“Concerns about customers rose for the third consecutive quarter,” says Martin, “concerns about suppliers pushed above their historical average. These aren’t abstract macro signals. They are precisely the kind of stress patterns that show up first in worsening receivables ageing, order book trending downwards, greater order fulfilment delays (by suppliers) or input materials returns or quality issues deteriorating, provided you look for them.”
He explains that to address these, the finance function is required to have genuinely integrated data flows—connecting cash flow, working capital, order book and counterparty risk signals, streamlined into a single visibility layer that leadership can act on.
However, according to Martin, the data infrastructure is only half the answer.
“The governance piece is equally important: those signals need a clear owner and a pre-defined escalation pathway. Insight that sits in a dashboard nobody reads has no operational value.”
Sharath Martin, Senior Policy & Insights Consultant, ACCA Asia Pacific
He points out that one of the issues in Q1 GECS highlighted by APAC CFOs was the proportion of firms reporting problems securing prompt payment increased.
“This is exactly the kind of early-stage stress signal that internal data should capture before it becomes a crisis. CFOs who have built the habit of reading the data with astuteness and who have a small, empowered team ready to respond, are the ones who convert early warnings to early action.”
A live operating condition
Considering the current situation, finance leaders in APAC are faced to recalibrate their capital allocation, pricing strategies, and cost management in response to geopolitical shocks and commodity price volatility.
Martin notes that the Strait of Hormuz is a critical energy artery for Asia, and several economies in the region have already enacted measures to reduce and ration energy use.
“This is not a future scenario. It is a live operating condition.”
He explains that the implication for capital allocation is that flexibility has to come first. “Shorter commitment horizons, greater scrutiny of capex that assumes stable input costs, and where possible, accelerating investment in energy – clean, secure and efficient and improving supply chain resilience.”
Martin says the goal is to preserve the ability to adjust because the range of plausible futures is wide and the cost of being locked in is high.
“On pricing, I see a pattern across the region that concerns me. Many APAC businesses have been absorbing cost increases rather than passing them through, compressing margins in ways that are genuinely difficult to reverse.”
He adds that the proportionof global accountants reporting increased operating costs rose by five percentage points in Q1 2026, reaching 69% — close to the all-time series peak set after Russia’s invasion of Ukraine.
“CFOs need to make an honest assessment of where pricing headroom exists and replace annual price-setting cycles with dynamic review mechanisms that can respond to conditions as they change.”
He says this remains true especially when their businesses serve into the global supply chain. “APAC needs to pivot from competing on cost to competing on value. Periodic cost management is no longer sufficient. In this environment it needs to be continuous discipline.”
The tension
Given that the global accountant confidence is nearing record lows, CFOs must balance caution with the need to continue investing in growth, carefully considering financial metrics for decision-making during such uncertainties.
“This is the tension that sits at the centre of every CFO’s agenda right now,” says Martin. “Confidence among finance professionals fell sharply in Q1 2026 and is now at its weakest since Q1 2020, though still well above that record pandemic-era low.”
He points out that the instinct when confidence collapses is to freeze, but that instinct needs to be tested carefully against what the other indicators are actually saying.
“Here is the part that often gets missed: after hitting a post-pandemic low in Q4 2025, the forward-looking Global New Orders Index registered a solid increase in Q1 2026, reaching its historical average level. The demand signal, while fragile, has not broken.”
Martin believes the CFOs who respond to the confidence number alone and pull back across the board risk compounding the downturn rather than navigating through it.
He thinks that the more useful framework is to distinguish sharply between investments that create optionality and those that lock in fixed cost. “In uncertain environments, optionality delivers a premium. The metrics that become important are cash conversion cycles, operating leverage ratios and scenario-adjusted return on invested capital, not static IRR calculations that assume conditions remain stable.”
For him, the question every investment decision should answer is not “what return will this generate if the
environment holds?” but “what does this return look like across a range of plausible futures, and how quickly can we adjust if conditions deteriorate?”
He says CFOs who can answer that with rigour will be able to keep investing selectively without exposing their organisations to unmanageable downside.
Risk management
The Q1 2026 GECS makes one thing unmistakably clear: risks are no longer operating in isolation, and governance frameworks that treat them as if they do are structurally ill-fitted for the current environment.
Martin says geopolitical instability is simultaneously fuelling economic volatility, intensifying cyber threats, disrupting supply chains and undermining business confidence.
“These are not parallel risks, they are interconnected and they transmit and amplify each another. Sustainability risks are not a matter for reporting disclosures – they impact business and economic resilience fundamentally. Nowhere is this clearer than in energy – economies that built an earlier and stronger dependence on clean energy are less impacted by the conflict in the Middle East.”
He explains that traditional risk registers were designed for relatively stable environments with clearly separated risk categories, and that they are not equipped for a world where a conflict in the Middle East simultaneously affects energy costs, cyber threat levels, supply chain reliability, borrowing costs and currency stability, all at the same time.
“Many organisations are struggling not simply because risks are intensifying, but because their frameworks were designed for a context that no longer exists.”
He recommends that the practical reform is to move from periodic, category-based risk reviews to dynamic, scenario-based assessments that explicitly map how risks transmit across the business.
For CFOs specifically, Martin says this means claiming a seat at the risk governance table that goes well beyond financial risk alone.
“The finance function has the modelling capability and the cross-functional visibility to lead on integrated risk intelligence. In my experience across the APAC region, the constraint is rarely capability, it is whether the governance structure gives the finance function the mandate and the authority to use it.”
The ROI of AI investments
Martin says the Q1 2026 GECS attributes some of the resilience seen in certain indicators to the current global AI boom, alongside favourable financial conditions and fiscal easing in several major economies.
Given this, AI is now seen as genuinely supporting economic activity at a macro level, but Martin says the picture at firm level is considerably more complicated, and the gap between macro-level benefit and firm-level governance readiness is where the real risk sits.
Survey respondents raised specific concerns about misuse and over-reliance on AI, and about automation creating unintended consequences.
“One observation that I think every APAC CFO should sit with: when data passes through ERP, CRM and third-party tools, even small errors can create major reporting inaccuracies.”
He believes that AI amplifies both capability and error at the same time. “The governance question is therefore not whether to adopt AI (that decision is largely made) but whether the controls exist to catch failure modes before they become consequential.”
On ROI evaluation, Martin encourages finance leaders to resist the pressure to justify AI investments primarily through headcount reduction.
“That metric is politically visible, easy to measure and almost always the wrong primary lens. The more durable value lies in speed, analytical depth and the quality of decisions the entire organisation can make, all of which are harder to quantify but more strategically significant.”
He advises finance leaders to define success metrics before deployment, not after, and include model reliability and data integrity as first-order evaluation criteria.
“The standard I would apply is straightforward: if the finance function cannot explain to its auditors, its board, its regulators and indeed its shareholders how a model reaches its outputs, the governance infrastructure is not yet fit for purpose, regardless of what the ROI calculation says.”
He adds that in an APAC context, where regulatory expectations around AI governance are developing rapidly and unevenly across markets, that standard is not just good practice. It is risk management.
