The survey, which recorded the views of 760 CEOs across the globe on their prospects, challenges and opportunities, found that more than four in 10 (43%) CEOs identify a continuation or return of COVID-19 related disruption, including new lockdowns and supply chain pressures, as the greatest risk to their business. This risk is perceived to be higher in Asia-Pacific (48%) than in the Americas (43%) or Europe (41%). Adding to the perfect storm that CEOs are bracing for, 35% of respondents point to geopolitical tensions and 43% to inflation as critical risks to growth, with the majority (69%) predicting inflation will negatively impact their company’s performance and growth. A sizable minority (16%) identified inflation as the single-biggest threat to their company’s revenue and margins.
As a result of increased geopolitical tensions, 95% of respondents are reshaping their investment plans and operations. According to the EY survey, geopolitical risks mean CEOs are delaying planned investments until the situation improves (43%). Many respondents are reconfiguring their company’s supply chains (40%) and relocating operational assets (39%); while a third are exiting businesses in certain markets (30%) or stopping planned investments altogether (29%).
Building sustainability as a core aspect of all products and services to engage customers (39%) and using technology to boost customer loyalty (34%) are the top two actions responding CEOs are planning to pursue to weather a challenging six months ahead.
At the same time, a significant majority (64%) intend to increase capital investment versus just 14% who plan to reduce. More than half (52%) plan to make an acquisition in the next year, while almost half (40%) of respondents plan to be active on all fronts, looking to acquire, divest and enter new joint ventures or strategic alliances. When it comes to their next transaction, 21% of respondents said that this will be driven by the need to invest in an early-stage business to enhance their existing portfolio and access new talent and 15% said that they will look to acquire a business in an adjacent sector to open new growth avenues.