A certain anxiety is clouding the otherwise optimistic outlook for CEOs when it comes to their organisations’ longer-term growth prospects. The threats – both societal and corporate – in PwC’s 21st CEO Survey highlight the need for chief executives to enact strategies that proactively manage the threats they can control, while preparing their businesses to thrive amid those that they can’t.

This year, joining over-regulation at the top of the list, a mainstay since it was included in the CEO survey in 2008, were other new threats, many with a digital focus.

 

CEOs are ‘extremely concerned’ about a variety of threats, many societal, not corporate.

 

Concerns beyond their control, including terrorism, geopolitical uncertainty and populism all jumped, while cyber threats soared into the top five. The availability of key skills and the speed of technological change both ranked in the top 10 globally.

It is certainly interesting that rather than internal corporate worries this year the survey points out that “the threats that trouble CEOs are increasingly existential”.

“CEOs are also not particularly agitated about activist investors, rising employee benefit and pension costs, access to affordable capital, volatile energy costs, or their own readiness to respond to a crisis,” the report says.  

 

Terrorism and cyber threats moved up; uncertain economic growth and exchange rate volatility moved down.

Common
ground

While each region had a slightly different slant on where they order the top threats, it’s striking how many share common ground. Cyber threats are a key concern for North America, the Asia-Pacific, Western Europe, Africa and the Middle East, with only Latin America and Central and Eastern Europe not ranking them in the top ten.

Overregulation, geopolitical uncertainty and increasing tax burdens make the top 10 for all of the world’s regions, with slight changes dependent on geopolitical concerns. For instance, where emerging economies are dominant, social instability is an extreme concern. Protectionism, on the other hand, is only a top 10 concern for North America, Western Europe and the Asia-Pac, where events such as Brexit are threatening profitability of businesses going forward.

It may be these bigger picture aspects, the ones keeping CEOs up at night, that are leading to a more cautious ‘somewhat confident’ response when asked about organisational growth in the next three years.

 

The perception of top threats varies by region.

 

Shift to
agile

But while CEOs are more troubled by societal and geopolitical shifts that are beyond their control than the change in dynamics in their own markets, the best they can do to mitigate these threats is to shift to agile ways of working and be ready to respond when their business is directly impacted.

Much like the nature of modern business itself, threats are coming from all angles and they must be understood, as well as actively managed, with the focus firstly on what can be influenced.

The broader threats seem beyond the control of most business leaders, but there are many that can be dealt with now, particularly when it comes to technological change. This is an issue that could be seen as societal, but it’s not the technology itself that’s the problem, rather the ability for businesses to keep up with it. Likewise, the seemingly shrinking talent pool the top end of town are fighting over may be attributable to events such as the rise in protectionism, but there’s also a strong case for looking inside the company first, and the current workforce, to see if that employee knowledge base can be leveraged and reskilled for the future.

Ultimately, the takeaway from the ‘threats’ to business is that opportunities exist within them. If technology is embraced, it can become a critical element to building a sustainable, future-ready business, rather than a reactive add-on. That goes for its people – together with the company culture – too.

Rather than continually looking outwards, the best way a CEO can respond to the ever evolving list of threats to their business is to start from within and create a business that can respond to any of the above. It may involve an overhaul of a legacy business structure, but it will ensure that the company will be prepared for whatever the world throws at it, this year, next and beyond.

 

Contributor

John Riccio

John is PwC’s Design & Deploy, Experience Consulting Partner.

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