KPMG Survey: CEOs Confident in Their AI Progress and U.S. Economic Growth, but Cyber and Geopolitical Risks Intensify

• When it comes to their organization's ability to keep pace with the speed of AI development and its impact on business operations, workflows and the workforce, 64% of CEOs are confident they are moving at the right pace or ahead of the curve. 32% are cautiously optimistic, while 4% are concerned and struggling to keep up.
• Importantly, most CEOs anticipate a return on AI investments in less than three years. 
  • 14% expect returns in just six months to one year.
  • 68% expect to see returns in one to three years.
  • And only 13% predict returns in three to five years.
• The top benefits of implementing AI across their organization include increased efficiency and productivity such as enhanced decision-making and data analysis capabilities, improved threat detection and security posture and increased profitability and growth. 

• 26% of CEOs indicate they have a high M&A appetite and will likely undertake acquisitions that have a significant impact to their overall organization over the next three years, while 48% plan to make acquisitions that will have a moderate impact to their organizations. 

• Across the board, CEOs report cybersecurity is the most pressing risk, challenge and area of investment to mitigate risks.
  • 56% of CEOs name cybersecurity as a challenge when implementing AI within their organization – more often than ethical challenges, data readiness, managing costs and translating AI investment into ROI.
  • 48% of CEOs report they are increasing investment in cybersecurity over the next three years to mitigate business risks – again, the highest level of all risks. 
• When it comes to cyber risk specifically, CEOs are extremely concerned about identity theft and data privacy (58%), their vulnerability to cyberattacks (53%) and fraud detection and prevention (51%), but note these areas are a top leadership priority and plans are in place to mitigate these risks.
• When asked what is causing them to accelerate their cybersecurity investments, CEOs identified a range of reasons including AI-powered social engineering and targeted attacks (78%), AI-assisted malware or phishing attacks (76%) and data and privacy risks associated with the deployment of AI agents (73%).
• Quantum computing capabilities are accelerating, but investment and attention are growing more slowly.
  • 34% of CEOs report quantum computing attacks against encryption are driving cybersecurity investments. An additional 20% report also report increasing investment to comply with U.S. executive orders mandating transitions for Post-Quantum Cryptography by 2030-2031.
  • 62% are aware of risks from quantum computing on encryption but do not yet consider it a priority. Only 4% have plans in place to mitigate these risks. 

Managing AI's impact on costs and margins

• One out of two CEOs report that managing costs of implementing AI are either mostly or very challenging. In this context, 88% of CEOs are prioritizing realized AI value over strict adherence to token budgets.
• 81% of CEOs believe the rising cost of AI will fundamentally reshape corporate margins more than labor costs over the next five years.

Closing the skills gap

• CEOs appear more confident in their workforce strategy and the ability for workers to adopt AI. 
  • CEOs report they expect to increase, not decrease, headcount in the coming years. 89% expect to increase their headcount over the next three years (60% - increase less than 5%; 26% - increase between 6-10%; 2% - increase between 11-25%).
  • However, when asked to identify the biggest workforce challenge their organization is facing, skills gap in the workforce (60%), upskilling and training employees on AI systems (55%) and attracting and retaining talent (49%) were top choices.
• Additionally, 81% say the integration of AI has made their organizations rethink how they train and develop their employees, while 75% say the integration of AI has made them rethink the skills required for entry-level roles.
• When asked about how their long-term workforce strategies (2-5 years) are changing in response to AI, CEOs are:
  • redesigning roles, career paths and team structure to reflect human-AI collaboration (86%);
  • focusing on retaining and re-training high-potential talent (83%);
  • hiring new talent with AI and tech capabilities (79%);
  • planning for workforce reduction in some areas (53%).

Navigating risks around the corner

• In the next three years, 71% of U.S. CEOs predict the major business disruption risk for their organization will stem from a lack of reliable AI access and advancement, not from cyberattacks or supply chain breakdowns.
• When it comes to AI and data sovereignty shaping their organization’s AI strategy, 69% are increasing their focus on internal data governance and control.

• In light of geopolitical events this year, 78% said regionalization (nearshoring/friend-shoring) has become more important than cost optimization in supply chain decisions.
• 39% report that their top strategy to improve supply chain resilience over the next 12 months is prioritizing the improvement of end-to-end visibility through data, AI or digital.