KPMG Study: CEOs Increasing Investments in Cyber Security as Risks Around Rise of Artificial Intelligence Proliferate

Knopp: “Threat levels on cyber risk are flashing red in the eyes of CEOs as AI capabilities both within and outside the organization continue to grow. Increased levels of investment in cyber security are needed as AI risks multiply.”

• U.S. CEOs are confident in the growth prospects for their country (85%), their company (78%) and the global economy (74%) over the next three years.
• CEO perspectives on the top risks they see for their organizations reveal the impact of increased disruption and the challenges of navigating long-term structural change.
  • CEOs identify the race to embrace and embed generative AI (GenAI) and other technologies (51%), geopolitical complexities (47%) and economic uncertainty (47%) as the challenges top of mind right now.
  • When asked to identify the top trends that could negatively impact their organization’s prosperity over the next three years, U.S. CEOs most highly ranked the cost of living, cybercrime and cyber security issues, and talent.
    • Only 54% of CEOs say their organization is well-prepared for a cyberattack.
    • 37% of CEOs are unsure if their organization’s cybersecurity can keep pace with rapid AI advancements, while 41% are unsure if they will be able to secure the talent and solutions they need to defend against AI threats.
    • 69% of CEOs are increasing their investments in cybersecurity to protect their operations and IP from AI threats.
  • U.S. CEOs cite geopolitics and political uncertainty, supply chain and operational issues as the top risks posing the greatest threats to growth over the next three years.
• As a result of these interrelated challenges, 74% of CEOs say they have already adapted their growth strategy, while 26% plan to do so but haven’t yet.
• CEOs identify M&A (30%) and organic growth (22%) as the most important strategies for achieving their organization’s growth objectives over the next three years.

Knopp: “The pressure to unlock value from GenAI investments is intensifying, while CEOs continue to prioritize its ethical and effective use. CEOs are working to keep pace, and they are focused on the long-term strategic considerations, including its potential to disrupt their business, reshape the competitive landscape, and develop new business models and revenue streams. KPMG is helping clients strategize and position their organizations for long-term, sustainable returns with GenAI.”

• 68% of U.S. CEOs say GenAI is a top investment priority despite uncertain economic conditions.
• 68% of CEOs expect to see return from their investments in GenAI in three to five years, while 21% expect returns in just one to three years.
• The majority are placing more capital investment in buying new technology (60%) than developing their workforce’s skills and capabilities (40%) when thinking about their growth and transformation objectives.
• When asked to identify the top benefit of implementing GenAI in their organization, CEOs cited increased efficiency and productivity through automating routine operations, upskilling the workforce for future readiness and increased innovation.
• CEOs most frequently identify information technology (74%), sales and marketing (59%) and finance and accounting (48%) as the top three functional areas where their organization will make GenAI investments over the next three years.
• When asked to identify the biggest challenges when it comes to implementing GenAI, CEOs identified ethical challenges (60%) and a lack of regulation (55%).
• CEOs express low levels of confidence that they will have their data ready to safely and effectively integrate GenAI (34%), their employees have the right skills to fully leverage the benefits of GenAI (39%) and their organization is ready to safely deploy and integrate GenAI with robust governance frameworks (56%).
• U.S. CEOs cite advancing digitization and connectivity across the business as their top operational priority to achieve their growth objectives over the next three years followed closely by their employee value proposition to attract and retain top talent.

Knopp: “CEOs are poised to seize M&A opportunities that will drive growth and transformation for their organizations despite changing market dynamics. M&A continues to be a strategic avenue for CEOs to adapt, innovate, and create value.”

• 49% of U.S. 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 39% plan to make acquisitions that will have a moderate impact to their organizations.
• 57% of CEOs say their organization will wait until the second half of 2025 to seriously pursue new dealmaking. 24% say they are waiting until 2026 and beyond.
• 46% of CEOs say their organization will not make significant investment decisions such as major capital expenditures and M&A activity until after the 2024 U.S. presidential election in November.

Knopp: “CEOs remain steadfast on their climate-related strategies, which they expect to deliver financial returns in the coming years. Reaching net-zero goals by 2030 is proving difficult due to challenges operationalizing those strategies, especially decarbonizing supply chains.” 

• Only 54% of CEOs are confident that their organizations will be able to meet their net-zero goals by 2030 with the complexity of decarbonizing supply chains (24%) and a lack of skills and expertise to successfully implement solutions (24%) cited as the major barriers.
• 70% of CEOs say they remain committed to their climate-related strategies, but they are adapting how they communicate it to meet changing stakeholder needs, while 27% say they have evolved their strategies to meet changing stakeholder needs.
• 60% of US CEOs expect to see significant returns from their ESG investments in the next three to five years with 24% predicting one to three years, while 68% report that they have fully embedded ESG into their business as a means of value creation.
• Over the next three years, US CEOs see their ESG strategy having the greatest impact on driving financial performance (74%) and attracting and retaining talent (26%).

Knopp: “CEOs increasingly favor a comprehensive return-to-office but the need for flexibility still holds. As this future unfolds, the integration of GenAI will become increasingly prominent, and upskilling the workforce will be a prerequisite for most white-collar roles."

• 79% of U.S. CEOs envision the working environment for corporate employees whose roles were traditionally based in-office to be back in the physical workplace in the next three years – a marked shift from earlier this year (34%). 17% envision these roles to be hybrid (46% earlier this year) and only 4% envision them being fully remote (3% earlier this year).
• 86% say they will reward employees who make an effort to come into the office with favorable assignments, raises or promotions.
• CEOs see an aging workforce, in particular, impacting their organization’s employee recruitment, retention and overall culture (89%), and 32% identify the number of employees retiring coupled with a lack of skilled workers to replace them as the factor having the largest impact on their company.
• CEOs believe organizations should invest in skills development and lifelong learning in communities to safeguard access to future talent (80%).
• When asked about the most likely impact of GenAI on their organization, 72% said it will not fundamentally impact the number of jobs but will require upskilling and existing resources to be redeployed; 27% said it will create more jobs than it eliminates.