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What do CEOs see as the top threats to their organization?

PwC has published the results from its 26th Annual Global CEO Survey, which polled 4,410 CEOs in 105 countries and territories in October and November 2022.

Nearly 40 percent of CEOs think their organizations will not be economically viable in a decade if they continue on their current path. The pattern is consistent across a range of sectors, including telecommunications (46 percent), manufacturing (43 percent), healthcare (42 percent) and technology (41 percent).

CEOs are seeing multiple direct challenges to profitability within their own industries over the next 10 years. More than half (56 percent) believe changing customer demand/preferences will impact profitability, followed by changes in regulation (53 percent), labour/skills shortages (52 percent), and technology disruptions (49 percent). 

While cyber and health risks were the top concerns a year ago, the impact of the economic downturn is top-of-mind for CEOs this year, with inflation (40 percent) and macroeconomic volatility (31 percent) leading the risks weighing on CEOs in the short-term – the next 12 months – and over the next five years. Close behind, 25 percent of CEOs also feel financially exposed to geopolitical conflict risks, whereas cyber risks (20 percent) and climate change (14 percent) have fallen in relative terms. 

The war in Ukraine and growing concern about geopolitical flashpoints in other parts of the world have caused CEOs to rethink aspects of their business models, with almost half of respondents that are exposed to geopolitical conflict integrating a wider range of disruptions into scenario planning and corporate operating models either by increasing investments in cyber security or data privacy (48 percent), adjusting supply chains (46 percent), re-evaluating market presence or expanding into new markets (46 percent), or diversifying their product/service offering (41 percent). 

Managing climate risk is a growing priority for businesses

While climate risk did not feature as prominently as a short-term risk over the next 12-months relative to other global risks, CEOs still see climate risk impacting their cost profiles (50 percent), supply chains (42 percent) and physical assets (24 percent) from a moderate to very large extent. CEOs in China feel particularly exposed, with 65 percent seeing the potential for impacting their cost profiles, 71 percent to supply chains, and 56 percent to physical assets. Recognising the impact climate change will have on business and society over the long-term, a majority of CEOs have already implemented – or are in the process of implementing – initiatives to reduce their companies’ emissions (65 percent), in addition to innovating new, climate-friendly products and processes (61 percent), or developing data-driven, enterprise-level strategy for reducing emissions and mitigating climate risks (58 percent). 

Despite an increasing number of countries now having some form of carbon pricing, a majority of respondents (54 percent) still do not plan to apply an internal price on carbon in decision-making, and over a third (36 percent) don’t plan to implement initiatives to protect their company’s physical assets and/or workforce from the impact of climate risk. 

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