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The principal risks identified on the Corporate Risk Register during the 2025-26 reporting period were:

Financial sustainability Ongoing geopolitical tensions and their impact Scottish Enterprise's reputation, influence and impact on delivery Cyber security and operational resilience

Ongoing Scottish Enterprise's geopolitical reputation, tensions and influence and their impact impact on delivery

Cyber security and operational resilience

Legal environment

Financial sustainability

RISK

Increasing fixed cost pressures and budgets that are not increasing in line with inflation, alongside current budgetary rules and arrangements (including annualised settlements and constraints on multi-year flexibility), are creating significant uncertainty over the level and timing of future funding.

This may create a more complex budget/funding environment for us to manage. The potential consequences include:

• Short-term reactive decision-making and inability to plan and deliver long-term strategic initiatives.
• Missed opportunities to support transformative economic growth and consequential delays or gaps in delivering on SE's core missions.
• Increased complexity in managing diverse funding sources.
• Greater exposure to external dependencies and volatility in funding streams.
• Loss of credibility and influence as a national economic development agency.
• Future financial sustainability challenges.

This financial risk has been reported as a principal risk for Scottish Enterprise throughout 2025-26. Significant reductions in costs and new, additional sources of funding are required to create a sustainable operating model.