Geopolitics and broader political uncertainty are now the greatest risk to business growth, according to a survey of more than 1,300 CEOs of the world’s largest businesses.
The KPMG 2023 CEO Outlook reveals geopolitics and political uncertainty have become the leading perceived risk this year for senior executives – concerns that didn’t even make the top five in the 2022 survey.
While confidence in the global economic outlook over the next three years remains broadly unchanged since last year’s survey (73% compared to 71% last year), there has been a significant shift across CEOs’ views on what constitutes a risk to their business.
Over three quarters of CEOs (77%) say rising interest rates and tightening monetary policies could risk or prolong the threat of a global recession. Meanwhile, over three in four CEOs (77%) believe that cost of living pressures are likely to negatively impact their organisation’s prosperity over the next three years.
The persistent flux in global politics, trade dynamics and international relations has compelled CEOs to reassess their strategic priorities and demonstrate resilience in navigating the intricate interplay of global political forces.
“Business leaders are facing challenges and obstacles to growth on multiple fronts – from geopolitical uncertainty and politicisation to increased stakeholder expectations in the ESG space and the adoption of generative AI,” said Bill Thomas, global CEO & chairman, KPMG International.
“What I find reassuring is that, despite the many macroeconomic and geopolitical challenges right now, mid-term global confidence remains relatively robust. There’s a consensus that we can, in time, return to a path of international, sustainable long-term growth.
“For CEOs – the opportunity to drive a return to a more equitable, successful planet is right in front of us. The key to success will be an unrelenting focus on long-term, strategic planning and commitment to avoid the danger of short-term, reactive leadership, which is always a threat during a period of deep uncertainty.”
The findings show that CEOs are continuing to invest heavily in generative AI in search of a competitive edge for the future, listing the technology as a top investment priority in the medium term. 70% of CEOs agree that generative AI remains high on their list of priorities, with most (52%) expecting to see a return on their investment in three to five years.
Despite a willingness to push forward with their investments, CEOs cited ethical challenges as their number one concern in terms of the implementation of generative AI. The cost of implementation was ranked second (55%) and a lack of regulation and technical capability were jointly third (50%).
Lisa Heneghan, global chief digital officer, KPMG International, said: “Generative AI is an increasingly hot topic in board rooms with leaders looking to better understand its potential and how to implement this technology in their business strategies.
“The challenge is spending the money in the right places and having the right skills to fully exploit the opportunities it presents. AI is unquestionably the internet moment of our time.
“It’s essential for CEOs to lead from the front, ensuring their organisations develop or adopt responsible, robust AI frameworks, upskill their workforce and relentlessly focus on safeguarding and governance – to reinforce that AI can genuinely unlock value for the business, its people and wider society.”