KPMG 2023 CEO Outlook

This is accompanied by a significant shift in what CEOs view as risks to growth for their business. CEOs now rank 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. 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. 

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). 

According to our recent KPMG global tech report, 55 percent of organizations said progress toward automation has been delayed because of their concerns about how AI systems make decisions.

Despite a willingness to push forward with their investments, global CEOs recognize that emerging technologies can introduce risks that should be addressed. Fifty-seven percent cite ethical challenges as the top concern when it comes to implementing generative AI, followed closely by a lack of regulation. As scrutiny and regulation of AI increases, organizations may need policies and practices they can articulate and apply with confidence.

CEOs are also grappling with how AI technologies have heightened cyber security risks. Despite how AI may help detect cyber attacks, 82 percent believe it could also bring about new dangers by providing new attack strategies for adversaries. And even with all the attention that has been placed on cyber security in the past few years, more than a quarter (27 percent) of CEOs still are not prepared for a possible cyber attack (up from 24 percent last year) while more than half (53 percent) say they are.

It is essential for CEOs to lead from the front, ensuring their organizations adopt responsible, robust AI frameworks and focus on safeguarding and governance.

This year’s challenging global landscape underscores the pressures CEOs feel to make decisions on a variety of critical issues — and they impact how CEOs plan to support and attract talent over the next three years.

Notably, global CEOs are steadfast in signaling their support of pre-pandemic ways of working, with a majority (64 percent) anticipating a full return to office is only three years away. This remains consistent with their views in the 2022 CEO Outlook. What’s more, 87 percent of CEOs say they are likely to reward employees who make an effort to come into the office with favorable assignments, raises or promotions.

This sentiment underscores the persistence of traditional office-centric thinking among CEOs. It comes against a backdrop of the debate surrounding hybrid working, which has had a largely positive impact on productivity over the past three years and has strong employee support, particularly among the younger generation of workers. As organizations continue to roll out their return-to-office plans, it is crucial that leaders take a long-term view that embraces the employee value proposition and encompasses the considerations and needs of employees to ensure that talent is nurtured and supported.

While there is broad alignment on the importance of inclusion, diversity and equity (IDE), there continues to be concern around the pace of progress. Two-thirds of global CEOs (66 percent) maintain that progress on inclusion and diversity has moved too slowly in the business world and a strong majority (72 percent) say that achieving diversity in workplaces requires implementing a change across the senior leadership level.