Threats: What Keeps CEOs Up at Night Differs By Region

PwC's 21st CEO Survey: The Anxious Optimist in the Corner Office

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Global Chairman Bob Mortiz on CEOs' record high optimism for 2018. Duration 2:06

"CEOs appear increasingly anxious about broader societal threats rather than direct business ones."

Bob Moritz, Global Chairman, PwC US

While generally exuberant in their outlook on the global economy, CEOs are ever more anxious about the threats to their organisation’s growth prospects. ‘Extreme concern’ levels climb across almost all the main threats we measure. An interesting exception is over-regulation, which stayed flat.  That’s not to say that over-regulation is no longer a top concern — in fact, it is the top ‘extreme concern’ globally and has been since we began asking the question in 2008.

Now, however, others are rising to the fore, such as terrorism — which vaulted from No. 12 to No. 2 overall — and geopolitical uncertainty, which is a top-five threat in every region except Asia-Pacific, where it ranks sixth. Meanwhile, the threat of ‘exchange rate volatility’, the No. 3 ‘extreme concern’ globally last year, barely makes the top 10 this year.

Each region reports a different mix of threats as the most concerning, but one general global observation is that CEOs across the world are increasingly anxious about broader societal threats — such as geopolitical uncertainty, terrorism, and climate change — rather than direct business risks, such as changing consumer behaviour or new market entrants. The threats that trouble CEOs are increasingly existential.

In fact, it’s striking what does not top the global list of concerns. Comparatively few CEOs highlight ‘potential ethical scandals’ as a threat — despite the growing number of firms that have suffered reputational damage in the past year because of ethical lapses. Globally, despite Brexit, CEOs are not overly concerned about the ‘future of the Eurozone’, with fewer than one in five CEOs ranking it as an ‘extreme concern’. This is true even in Western Europe, which, in fact, saw the biggest drop in ‘extreme concern’ regarding this threat.

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’. Again, they are more troubled by larger societal and geopolitical shifts than by the dynamics in their own market.

What keeps CEOs up at night?

The one exception is technology-related developments (e.g., ‘cyber threats,’ ‘speed of technological change’, ‘availability of key skills’), where we see anxiety about the impending promise and perils of artificial intelligence (AI) taking hold.  We project that AI will contribute an additional US$15.7 trillion to global GDP by 2030, an increase of 14%. That boon to the overall economy, however, will come at great cost to those who cannot rise to its challenges in time.

Looking across the top 10 threat lists of all seven regions, ‘geopolitical uncertainty’, ‘over-regulation’, and ‘increasing tax burden’ are the three that appear on every region’s radar. ‘Availability of key skills’ and ‘speed of technological change’ appear on every list except those of Latin America and Africa, respectively. Perhaps the most ominous finding is terrorism’s rise in the rankings; it is a top five ‘extreme concern’ in every region save Africa.

 

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Ilona Steffen
Global Marketing & Insights Director, PwC Switzerland
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