Dubai, UAE— CEOs from around the world consider geopolitics and political uncertainty as the greatest risk to the growth of their business — be it navigating a company’s presence in a conflict zone or attempting to navigate disrupted supply chains and manage price fluctuations.
The conclusion emerged from a survey undertaken by KPMG titled KPMG 2023 CEO Outlook. This shift indicates CEOs have come to grips with the fact that geopolitical risk is not only a short-term consideration. In a geopolitically fragmented world, CEOs often become de facto political players.
Their approach should elevate politics on the boardroom agenda while also creating a strategy around geopolitical risk that includes specialized insights, scenario planning and stress testing.
Confidence in the global economy remains broadly unchanged year over year, surpassing pre-pandemic levels of confidence.
Almost three in four global CEOs (73 percent) are confident about the economy over the next three years, compared to 71 percent last year. It reflects a clear resilience and a collective focus to get the world back on a sustainable, long-term growth trajectory.
However, CEOs’ confidence in their own company’s growth prospects are at a three-year low; at the start of 2020, 85 percent of CEOs were confident in their company’s growth prospects, compared to 77 percent this year.
CEOs face shorter-term barriers to delivering growth over the next 12 months. For example, more than three in four (77 percent) say that rising interest rates and tightening monetary policies could prolong any potential or current recessions, while over the next three years, 77 percent believe cost-of-living pressures will negatively impact their organization’s prosperity.
As CEOs navigate and respond to these challenges, they recognize that demonstrating personal integrity is key to building trust, with a majority (71 percent) saying they are prepared to divest a profitable part of their business if it was damaging their reputation.
As geopolitics rise on boardroom agendas, 61 percent of CEOs say they would take a public stance on a politically or socially contentious issue, despite board concerns.
Artificial intelligence (AI) is transforming nearly every field of human endeavor and is embedded in more and more aspects of everyday life, businesses and society. As tools like Bard and ChatGPT have gained prominence, global CEOs increasingly recognize generative AI’s seemingly limitless potential and are keeping their foot on the gas in terms of their investment and exploration of the technology.
Global CEOs are making generative AI a top investment priority. The survey shows that 70 percent are investing heavily in generative AI as their competitive edge for the future, with most (52 percent) expecting to see a return on their investment in three to five years. In fact, increased profitability was cited as the number one benefit of implementing generative AI within an organization (22 percent).