South African chief executive officers (CEOs) cite disruptive technology as the foremost risk and greatest threat to organisational growth over the next three years, a new survey reveals.
The KPMG 2022 CEO Outlook South African edition says local CEOs are keeping technology risk top of mind as they plan for the future. They view disruptive technology as one of the top three fears.
The annual report, which is globally-driven, draws on the perspectives of 1 325 CEOs across 11 markets to provide insight into their three-year outlook on the business and economic landscapes – including South Africa.
The advisory firm says the latest edition − which examined the global pandemic, inflationary pressures and geopolitical tensions − still speaks to some positive outcomes with local CEOs.
It states local CEOs are already mitigating any anticipated recession risks by focusing on technology and talent, as well as environmental, social and corporate governance (ESG), to shape their progress over the next three years.
The KPMG survey reveals that six out of 10 local executives believe the most important growth objectives over the next three years are organic growth (ie: innovation, research and development, capital investments, new products and recruitment), as well as strategic alliances with third-parties.
It says a promising 72% of local executives have already taken steps to boost productivity in preparation for anticipated recession, indicating CEOs are cautiously focused on future opportunities during such uncertainty.
According to the survey, the anticipated recession may be pushing businesses to reconsider their technology strategies.
It says 34% of local CEOs (37% globally) plan to pause or reduce their digital transformation strategy in the next six months to prepare for an anticipated recession, while 38% of CEOs in SA (40% globally) have already paused or reduced their digital transformation strategies.
On cyber security, KPMG says 74% of local CEOs, compared to 72% CEOs globally, view cyber strategy as critical to engender trust with their key stakeholders.
According to the survey, local CEOs are more prepared than their global counterparts, with only 6% admitting they are underprepared for a cyber attack, compared with 23% globally in August 2022.
“A combined 82% of CEOs in South Africa say they’re either very well or well-prepared, compared to slightly over half globally (56%),” it states.
Precariousness
On the anticipated recession, top fears and operational priorities in SA, the report says, top three risks posing the greatest threat to organisational growth over the next three years are emerging/disruptive technologies, regulatory risk and supply chain (procurement process).
“CEOs are keeping technology risk front of mind in the short- and long-term. In fact, disruptive technology has emerged as the top risk and greatest threat to organisational growth over the next three years, with four times as many CEOs than KPMG’s CEO Outlook Pulse Survey earlier this year (12% in August 2022 versus 3% in January and February 2022) citing this as a priority.
“However, locally, supply chain risk is now highlighted as the top risk, which is a change from 2021, where cyber security was identified as the top risk. Even so, 82% of the local CEOs have noted they are prepared for cyber attacks, compared to 56% globally.”
Turning to ESG, Ignatius Sehoole, CEO of KPMG SA, says: “When examining the challenges in delivering ESG strategies, we have seen that local CEOs list ‘identifying and measuring agreed metrics’ as the biggest challenge compared to ‘pressing business/economic matters redirecting focus from ESG’ for global CEOs.”
He explains further: “The importance of ESG initiatives on businesses, especially with regards to improving financial performance, driving growth and meeting stakeholder expectations cannot be stressed enough.
“While we know there is a lack of an accepted global framework for measuring and disclosing ESG performance, the KPMG survey revealed that 65% of stakeholders (institutional investors and employees) are demanding greater ESG transparency and reporting, and 60% of CEOs noted that 10% of their revenue would be allocated to invest in programmes to enable organisations to be more sustainable.
“However, what is encouraging to see is that confidence in the resiliency of the global economy over the next six months is optimistic, with 64% of local CEOs − compared to the 73% of global executives – indicating they are still cautiously focused on future opportunities during the current uncertainty.”
Business Leadership South Africa CEO Busisiwe Mavuso adds: “There is a myriad of new investment opportunities available in South Africa, such as renewable energy generation and the transmission sector, and of course, the electric vehicle manufacturing sector and the generation of green hydrogen are seeing increased interest and growth locally.”
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