Emerging Technologies Shift Risk Landscape for CEOs

Professional services company EY recently released the latest edition of its CEO Outlook Pulse Survey.

Based on the firm’s quarterly survey of 1,200 global executives and 300 institutional investors completed in August, it reports corporate chiefs’ expectations for future growth motivations and strategies.

The report found that against a rapidly evolving business landscape, CEOs consider disruptive technology including AI, changing customer behaviours and macroeconomic uncertainty as key disruptive forces.

In this Q&A, EY global vice chair of strategy and transactions Andrea Guerzoni discusses the results and what they mean for how emerging technologies are viewed.

AI Business: What is the aim of the EY CEO Outlook Pulse survey? 

Andrea Guerzoni: The EY CEO Outlook Pulse survey measures the main trends and developments that are top of mind for business leaders and impact the world’s leading companies. The survey measures 1,200 executives globally from large companies to provide a representative global snapshot of expectations towards growth and long-term value in relation to the external global business landscape and capital markets. It is part of the EY CEO Imperative series, a broader series that covers the wider CEO agenda.

In the latest CEO Outlook survey, EY introduced the CEO Confidence Index by quantifying CEO sentiment across various economic and business dimensions. The survey revealed one clear finding – CEO confidence has a clear impact on and a strong correlation with activity. Confident executives are prepared to make bold decisions and much more willing to be proactive than those who aren’t.

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What role do emerging technologies play in the complex landscape CEOs need to make risk-based decisions about?

Emerging technologies are one of several disruptive forces impacting the external environment for CEOs. These forces are complex and highly intertwined. They are also shaping “a new normal” for CEOs – an era of continuous disruption, volatility and change. As such, CEOs are starting to shift in mindset towards risk and converting what would traditionally be seen as “challenges” into opportunities for growth and expansion.

CEOs have until now struggled to keep up with the fast-moving environment – less than four in 10 (38%) surveyed considered themselves ahead of the curve. However, there is a growing cluster of confident CEOs and business leaders out there now who view this incredibly complex environment as a chance to turn disruption into an advantage, get one step ahead of the game, grow faster than the competition and find smarter ways of working – with emerging technologies playing a central role here.

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For example, emerging technologies may help a CEO change the shape of their company’s operations or customer experience, reacting to customer needs, or support them in taking a faster, more proactive and data-driven approach towards risk and portfolio reviews.

The report recommends CEOs adopt a “digital twin” approach using AI for predictive analysis. What does this involve?

Digital twins – virtual models or replicas of physical objects, systems or processes – enable organizations to simulate real-world scenarios and outcomes, helping them make better-informed decisions.

With the emergence of AI, advanced data and analytics, CEOs can and should leverage the potential of digital twins across the business to leverage deep insights into asset operations, provide predictive analytics to estimate future market movements and help CEOs make more informed and accelerated decisions about their portfolios.

The report also highlighted how fundamental data is to portfolio analysis and the survey clearly shows us that access to data is an issue for CEOs that could be hindering the portfolio review process.  Digital twins, if used in the right way, can in part help rectify some of this.

What did the survey reveal about the role of emerging technologies in CEO confidence and how they balance risk against opportunity?

CEOs recognize that emerging technologies are crucial for growth and survival. With a growing understanding of the role emerging tech is playing in the external environment, as well as a deeper awareness of the impact it is having on other disruptive forces – such as customer behaviour, geopolitics, cost or supply chain – CEOs are increasingly taking a balanced and pragmatic approach towards it.

We are seeing them shift from a reactive footing to a more proactive one – nearly a quarter of CEOs find portfolio reviews too reactive – and plan to use technology to help them get ahead of the game; 38% of CEOs plan to use emerging tech to implement better ways of working, deliver innovation or explore new competitive business models.

This is particularly the case for more confident CEOs who are actively using emerging technologies to shape their growth strategies and confidently manage risks. Their confidence in these technologies leads to a stronger pursuit of opportunities that can transform their businesses.

Did the report highlight any other interesting observations about emerging technologies?

The report highlights that emerging technology is still viewed globally as the main disruptive force – 38%. However, this varies by region, with America placing it as the least disruptive force (30%), with changing customer behaviour a top challenge, compared with Europe where 40% of CEOs cite it as the top disruptive force.

Regardless of where CEOs rank disruptive technology, it remains a top concern and CEOs are prioritizing the likes of AI as a transformative tool to drive innovation, efficiency and competitive advantage.

CEOs, particularly confident CEOs, are investing in AI and other emerging technologies to adapt to rapidly changing customer behaviours and macroeconomic uncertainties. This strategic focus is driven by the need to stay competitive and relevant, with a concern about being left behind in an industry increasingly shaped by continuous technological advancements.

As such, CEOs should continuously be evaluating and adapting their portfolios, looking to identify fresh opportunities for value creation via emerging tech, whether that be investing or entering into strategic tech partnerships, to maintain a competitive edge and drive long-term growth for their business as a whole.