CEOs reveal biggest risks in 2016

Global issues _ generic
By Alec Mackenzie, The CA magazine

20 January 2016

New research highlights business leaders’ concerns about the global economy, politics and skills shortages.

Two out of three (66%) CEOs see more risks facing their businesses today in comparison with three years ago, according to PwC’s Annual CEO Survey published at the opening of World Economic Forum in Davos, Switzerland.

The results underline a generally cautious outlook for the next 12 months among many of the 1,400 CEOs interviewed. Globally, just over a quarter (27 per cent) of CEOs believe global growth will improve in 2016, compared with 37 per cent last year.

Skills shortages

Concerns about the availability of key skills remained particularly high (72 per cent), most notably in the entertainment and media, and technology sectors.

CEOs also highlighted a potential shortfall in industries more traditionally aligned with 'STEM' skills including manufacturing, pharmaceuticals
and life sciences.

Geographically, these concerns were highest in Asia Pacific (81 per cent), the Middle East (83 per cent) and Africa (86 per cent), and lowest in Western Europe (59%) but still sitting at more than 50 per cent. Business recruitment activity was highest in India (70 per cent), the UK (66 per cent)
and China (57 per cent).

Threats on the rise

As in previous years, over-regulation was viewed as the top threat to companies’ growth prospects, with 79 per cent of business leaders citing this as their primary concern.

Nevertheless, geopolitical uncertainty has jumped from fourth place in CEO concerns last year to second this year, for 74 per cent of those surveyed.

Worries about exchange rate volatility, China's economic rebalancing, crude oil price falls, and security concerns all impacted, meaning an overall increase in uncertainty about the global economy's growth prospects.

Declining confidence

The research also indicated confidence in businesses' own revenue growth for the next 12 months has fallen – and found that 35 per cent were 'very
confident', compared with 39 per cent last year.

Swiss CEOs markedly exhibited the lowest confidence, with only 16 per cent very confident of growth, versus their more optimistic counterparts in India (64 per cent), Spain (54 per cent)
and Romania (50 per cent).

For nearly every major economy in the world, confidence in revenue growth was also down from 2015, with only Russia bucking the trend as confidence rose to 26 per cent from a deep low of 16 per cent last year.

In terms of investment prospects, the US, China, Germany and the UK remain the countries CEOs viewed as the most important for growth in the next 12 months, while Mexico and the UAE rose to replace Indonesia and Australia in the top 10.

Commenting on the survey results, Dennis Nally, global chairman of PwC, said: "There's no question that business leaders' confidence in both the global economy and their own
company growth prospects has taken a knock.

“No matter what the business size, the threats it
faces are becoming more complex, crossing the borders of geopolitics, regulation, cyber security, societal development, people, and reputation.

“There is a new spectrum of risk for CEOs that represents threats to both national and commercial interests.”

Find out more about the survey.


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