While CEOs are seeing benefits from their investments in emerging technologies, they’re also nervous about cyber risks, ethical challenges and lack of regulation. In today’s environment, that’s especially the case with their investments in Generative AI (GenAI), with 75 per cent of Canadian CEOs making Generative AI a top investment priority according to the latest edition of KPMG’s CEO Outlook survey. Disruptive tech like GenAI can boost productivity and drive innovation, but it can also open up organizations to new risks and amplify cyber vulnerabilities.
In Canada, 67 per cent of CEOs agree that disruptive technology will negatively impact prosperity over the next three years; emerging or disruptive technology is considered the No. 1 threat to growth among CEOs. Cybersecurity remains a key concern as the technology landscape evolves at a rapid pace, without the guardrails of regulation—and as bad actors also embrace disruptive tech to bolster their causes.
On the other hand, cybersecurity dropped three spots since the 2021 survey, from third to sixth place, as a threat to growth. This is likely due to cybersecurity tooling and processes being built into systems, rather than treated as an add-on. In fact, 56% of CEOs believe their organization is well-prepared for a cyberattack. For small and mid-sized businesses, emerging tech is the No 2. threat, with cybersecurity being the first, according to the recent KPMG Private Enterprise Business Survey.
It’s the CEO’s role to find the right balance between risk management and innovation. If you don’t embrace disruptive technologies like Generative AI, your growth plans are at risk.
Emerging tech and the threats to growth
Over half of Canadian CEOs say their organization is well-prepared for cyberattacks, yet they also fear risks that may arise with the introduction of GenAI. Those who say they’re unprepared cite concerns around vulnerable legacy systems or infrastructure, increasing cyber threat and attack sophistication, a lack of investment in cyber defenses and a shortage of skilled personnel.
Bad actors are also investing in GenAI, but they’re not bound by the same ethical requirements for responsible AI as ‘good’ actors. That means they can stage larger-scale attacks more easily, while using GenAI to evade existing checks and balances. A majority of Canadian CEOs (93 per cent) agree that GenAI is a double-edge sword in that it may aid in the detection of cyberattacks, but also provide new attack strategies for adversaries.
Bad actors are not typically going after IT systems directly; they’re targeting employees—often new hires who are unfamiliar with personnel and processes—with phishing and spear-phishing campaigns. These campaigns are becoming increasingly sophisticated, thanks to advancements in technology. For example, GenAI can be used to automatically craft targeted campaigns that pull from victims’ social media profiles. So, while CEOs may feel their organization is well-prepared, their employees and customers may not feel the same way.
93% agree Generative AI is a double-edge sword
Investing in disruptive technologies
Advancing digitization and connectivity across the business is the No. 2 operational priority for growth; employee value proposition to attract and retain top talent coming in at No. 1. And despite ongoing economic uncertainty, investing in GenAI is the top investment priority for three out of four Canadian CEOs.
Canadian small to medium-sized businesses have similar priorities, with 80 per cent racing to seize on the potential of AI. In fact, almost three in four (74 per cent) are already using AI/machine learning to address labour shortages, 78 per cent are considering AI to bolster cybersecurity and 76 per cent agree the benefits of GenAI outweigh the risks of adopting it.
Cyber has been leveraging AI in a positive capacity for many years at large enterprise levels, especially in user behavioral analytics. What’s exciting about the next iteration of AI is that it will be able to support medium and small businesses, enabling and upskilling those teams to better defend against the proliferation of cyberattacks.
Data has always been important, but it’s a re-emerging imperative; strong data will drive better AI components. Disruptive technologies like the metaverse, virtual/augmented reality, cryptocurrency and blockchain haven’t taken off in the same way as GenAI. That could be because there’s a direct link between a company’s data and their growth plans; if they can understand consumer behaviors through algorithms, for example, then they can deliver growth.
Technology disruption varies by industry. The healthcare sector is being disrupted by remote care; the energy sector is being disrupted by smart grids; and the agricultural sector is being disrupted by IoT sensors and drones. These technologies are bringing innovation to their respective sectors, and they also bring new risks. Healthcare providers, for example, have to worry about data breaches that impact patients’ medical data, while energy providers have to worry about state-sponsored attacks on critical infrastructure.
At the same time, upskilling employees is considered almost as important as investing in technology, with 43 per cent of CEOs saying they’re placing more capital investment in developing their workforce’s skills and capabilities versus 57 per cent placing more capital investment in buying new technology. In last year’s survey, the viewpoints were quite different, with CEOs favouring technology (80 per cent) as their focus of investment over developing their workforce (20 per cent). This could represent their current phase of implementation, or it could be recognition that a skilled workforce is required to fully realize technology ambitions.
A balancing act for CEOs
77% agree that lack of regulation and direction for Generative AI within their industry will be a barrier to their success
While data is an asset, it can also be a liability—bad data can lead to inaccuracies, mistakes, poor decision-making and unintended consequences for society at large. More than half (55 per cent) of Canadian CEOs are struggling with the ethical challenges and lack of regulation around GenAI. And 77 per cent agree that the lack of current regulations and direction for generative AI within their industry will be a barrier to the organization’s success, which is significantly higher than their global peers (69 per cent).
The fact is there will always be a regulatory lag with emerging tech—an intermediary period where CEOs must mitigate risk while delivering on growth. Finding a balance between the two is high on the CEO agenda. If they want to hit their numbers, they need to invest in technology while simultaneously investing in cybersecurity. They also need to recognize that they’re operating in a very different world from even a few years ago.
Employees are using open platforms in their personal and professional lives. Those platforms can’t be controlled by corporations, yet reputational damage is far more likely to happen on an open platform than on an internal corporate intranet. Employees have already embraced disruptive technologies like GenAI in the workplace, regardless of the corporate stance. Just as past attempts to block software-as-a-service applications led to shadow IT, the same will happen with disruptive technologies like GenAI.
Rather than blocking disruptive technologies, CEOs need a strategy that allows employees to embrace the tech they need to innovate, and to do so in a secure, responsible, ethical way. KPMG’s Global Tech Report found that many Canadian companies are adopting technologies based on what their competitors are doing. But transformation needs to be done with intention—in relation to the organization’s objectives and core values.
Looking ahead
Investing in emerging technologies can boost productivity, improve efficiencies and drive innovation, while helping to attract and retain talent. It’s essential to consider the employee experience, because talent is key to secure tech adoption and transformation. Aside from hiring skilled talent, there’s also a need to upskill employees and provide cyber training, particularly since employees are often the entry point for cyberattacks.
CEOs have a tough balancing act: They need to invest in what makes sense for their business, balancing the risks with the opportunities, and do so by design. That means implementing tech to create business value, while simultaneously investing in cybersecurity to protect the organization, its employees and its customers—and ensure a successful transformation. Finding the right balance can create a secure foundation for growth.
Key takeaways:
- An investment in disruptive technology should go hand-in-hand with an investment in cybersecurity; the two are not mutually exclusive.
- Data is an asset, but it’s also a liability. Generative AI can help deliver on your growth plans, but it must be used responsibly—or it could become a liability.
- Invest in architecting a portfolio of technologies that suit the needs of your specific industry sector to get the best return on investment.
- Transformation is always human. There’s a limited talent pool that can bring together IT skills with industry expertise, so invest in upskilling your teams and work with a trusted advisor that’s familiar with your industry.
- Design a strategy for disruptive technology that is both scalable and secure, and ensure testing is done with a small control ahead of launch.
- Technology transformation should be done with intention, in relation to the organization’s objectives and core values—rather than copying what your competitors are doing.
Explore more insights from the CEO Outlook series
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About our surveys
KPMG International surveyed 1,325 global CEOs from major organizations in 11 countries (Australia, Canada, China, France, Germany, India, Italy, Japan, Spain, the U.K., and the U.S.) across 11 key industry sectors, including asset management, automotive, consumer and retail, energy, financial services, infrastructure, life sciences, manufacturing, technology, and telecommunications. The CEOs are drawn from companies with annual revenue over US$500 million and a third of the companies surveyed have more than US$10 billion in annual revenue. The survey was conducted from August 15 to Sept. 19, 2023.
KPMG Private Enterprise surveyed business owners or executive level C-suite decision makers at 700 small-and-medium-sized Canadian companies between August 30 and Sept. 25, 2023, using Sago's premier business research panel. A quarter of the companies surveyed have more than C$500 million and less than C$1 billion in annual revenue, a quarter have more than C$300 million and less than $500 million in annual revenue, 23 per cent have between C$100 million and C$300 million in annual revenue, and 26 per cent have between C$10 million and C$50 million in annual revenue. No companies were surveyed under C$10 million.