What our CEOs are worrying about

JOHANNESBURG – Auditing firm KPMG’s 2018 Global CEO Outlook has revealed that chief executives still believed that economic conditions nationally and globally were conducive to grow businesses, though greater anxiety on existential threats remained.

The report, released this week, said chief executives had to manage their exposure to geopolitical volatility, cyber-security risk and demographic shift headwinds more this year than they did last year.

The survey covered 1300 chief executives in 11 key markets including China, Germany, India and the US in industries such as asset management, automotive, banking, retail, manufacturing, technology and telecoms.

It said that after many years of international consensus on globalisation, the potential withdrawal from trade agreements by some developed countries and the UK’s decision to exit the EU showed that nationalism was on the rise.

KPMG said chief executives were also worried about a more nationalistic approach to trade, citing a return to territorialism as the No1 threat to growth.

KPMG global head of clients and markets Gary Reader said leadership teams needed to embed geopolitical intelligence into their strategic thinking and risk assessments.

“Now more than ever, chief executives need to develop their geopolitical skills and antennae. Increased political uncertainty around the world has to be factored into board thinking and decision-making,” he said. “Geopolitics now has to be seen on par with other strategic challenges and CEOs need to manage in an increasingly uncertain environment.”

KPMG said cyber-security had become a mandatory boardroom topic as governments and regulators increased their scrutiny on them.

It said about half of all chief excutives (49percent) said that a cyber attack was now a case of “when”, instead of “if” as greater connectivity brought increasing cyber vulnerability.

The British Department for Digital, Culture, Media and Sport this week said that only one in 10 FTSE 350 companies operated without a response plan for a cyber-incident. The group also disclosed that just 6percent of businesses were completely prepared for new data protection rules.

KPMG said many executives were concerned about the robustness of their defences. It said 51percent believed they were well-prepared for a cyber attack. Chief executives from the infrastructure sector considered themselves to be the most well-prepared against potential cyber-aggressors compared to their colleagues.

Another key headwind was generation shift, with the focus on millennials.

The KPMG report said while millennials represented significant spending power, 45percent of the executives said their organisation struggled to understand how the needs of this generation differed.

“Millennials often have a clear philosophy on this,” said Feike Sijbesma, the chief executive of global science-based company Royal DSM.

“They really want to do something meaningful with their lives. They want to make an impact, and see sustainability as a key element of this. You will only continue to be successful if you adapt and make your company future-proof.”

– BUSINESS REPORT