The KPMG 2022 CEO Outlook Survey – where 1,325 global CEOs provided insights into their 3-year outlook on the business and economic landscapes – found that despite geopolitical and economic challenges, global economic confidence over the next 3 years has rebounded from early 2022, rising to 71 percent.
CEOs are prepared to weather current geopolitical and economic challenges while still anticipating long-term global growth. They have learned to become more agile to navigate the unpredictable – realigning their workforces, untangling supply chain disruptions and adapting to geopolitical and economic impacts. As the possibility of recession looms, many are already prepared with a deep focus on planning and agility. This includes leveraging on technology and balancing it with talent strategy.
Navigating the Current Arena
While it is unsurprising that the economic climate is now a top concern for business, over these past few years, business leaders have learned to navigate the unpredictable factors surrounding them. In line with recognizing geopolitical and economic impacts, there are opportunities to be found in this fog of uncertainty brought on by the promise of technology, talent, economic outlook, and ESG.
The cyber environment is evolving quickly with 77 percent of CEOs seeing information security as a strategic function and a potential source of competitive advantage. CEOs are changing how they support and attract talent, and their efforts are buoyed by a focus on their people and experimenting with different workflows.
Global businesses are putting major focus on the social aspect of ESG: 68 percent of CEOs believe progress on inclusion, diversity, and equity (IDE) has moved too slowly in the business world, and 73 percent believe scrutiny of IDE performance will continue to increase over the next 3 years.
“Companies are also growing and learning to deal with these challenges head-on. They know the work that must be done and the need for speed and agility in these uncertain times,” KPMG in the Philippines Vice Chairman & Chief Operating Officer and Head of Advisory Emmanuel P. Bonoan briefly explains.
The CEOs’ Perspective
Seventy-three percent of CEOs believe a recession will upend anticipated growth over the next 3 years, and three-quarters (75 percent) also believe a recession will make post-pandemic recovery harder. On the other hand, seventy-one percent of CEOs predict a recession will impact company earnings by up to 10 percent over the next 12 months.
Compared to overcoming obstacles during 2019 and 2020, CEOs are now better prepared to weather short-term challenges with resiliency measures in place, while still anticipating long- term growth. The top three steps include: boosting productivity (50 percent), managing costs (43 percent), and reconsidering digital transformation strategies (40 percent).
The Importance of Risk Management in Navigating the Future
As companies continue to navigate the changing landscape resulting from the COVID-19 pandemic, 85 percent of global CEOs report positive growth expectations for their organizations.
Being resilient also means acknowledging the realistic approaches towards facing challenges ahead for CEOs. With a ‘prevention is better than cure’ mentality as a driving force in foreseeing problems within business operations and using foresight in laying out several options and plans when objectives, goals, or expectations are not achieved, these attributes can secure a future in various industries that thrives in a rapidly evolving ecosystem. It is imperative to highlight the importance and benefits of risk management procedures in establishing a template of guiding principles that people can follow when risks occur.
“What businesses went through in the last couple of years underscored the importance of an efficient and effective enterprise risk management framework. In KPMG, our ERM methodology takes a structured, holistic approach to minimize (extreme) losses, reduce volatility of earnings and maximize profit even during uncertain times,” Bonoan shared. KPMG in the Philippines continues to work hand in hand with companies to help them grow, innovate and transform. In a digital world and a new normal, its people is still a company’s most important investment, greatest asset, and secret sauce. With the shifting perspectives on technology—how it can transform lives and businesses for the better, the firm is prepared and excited to help its stakeholders take advantage of the opportunities in this space.