Annual Global CEO Survey Shows Record Levels of Pessimism

The 23rd Annual Global CEO survey from PwC was launched yesterday and it is interesting to note that this year sees a record level of pessimism from CEOs around the world. This is in stark contrast to 2018, when there was record level of optimism.

Bob Moritz, Global Chairman at PwC, states that “more than half of CEOs we surveyed believe the rate of global growth will decline in 2020… Just 27% of CEOs are very confident in their prospects for revenue growth in 2020 – a level not seen since 2009.” [1]

Whilst the report considers a wide variety of factors in some detail from the 1,581 chief executives from 83 global territories, the key highlights include an increase in perceived threats from trade conflicts and uncertain economic growth with the greatest threat being over-regulation.

Cyber risks are a growing concern and with bigger data breaches and bigger fines being reported across industry sectors, organisations are beginning to realise the threat that holding too much data can have when weighted against the idea that data should be an asset. How many firms exist who still say today that they hold a lot of data yet still don’t know what to do with it or where to start interrogating it for the improvement of service and to reduce customer harm?

The general public is more and more aware of the value of their own data and the importance of privacy, security and trust. 2020 is likely to see an increase in the power shift from business to consumer and one of the predictions is that the digital world is increasingly likely to be split up with more regulation on the way.

Artificial Intelligence is already upon us and decisions are now being made without the need for human intervention. The aim is that we should benefit from productivity gains, however, we need to ensure that the skills gap does not continue to widen. Automation will see tasks and jobs disappear from the workplace and we will need to see more creative and critical thinking and creative outputs to stop a decline of human centred workflows.

The PwC report highlights that organisations that have invested and made progress in upskilling programmes are the ones benefiting from better business outcomes, stronger cultures, increased productivity and business growth. It is now more important than ever that organisations look outside of traditional recruitment models and look to engage more with their local education systems, governments and the business community on a hyper-local level to help define the skills needed for the future and to ensure education and development programmes meet those requirements.

Interestingly, climate change is high on the agenda within the global CEO feedback. At RWA, I have talked for a number of years about the need to develop sustainable futures which is a broad subject in its own right, and climate change is a large part of this. Whilst progress towards green economies is still slow, more and more consumers are becoming aware of green issues and climate change and are making decisions now that affect their spending habits. Consumers are beginning to realise that they have an opportunity to make small changes, including looking at those firms that they choose to buy from and it’s important therefore that organisations look at their purpose and their own impact on sustainable futures.

As to whether diesel and petrol cars will continue to be used over the next 10 years, we are already beginning to see an impact on UK travel with many cities already starting the discussions around introducing congestion charges and even banning certain vehicles in the next 2 to 3 years. The way in which we travel, and transport products around this, is going to change soon.

There are no answers in the report, but it is suggested reading and it’s important that you start to consider some of the points raised. [2] Horizon scanning, future thinking and forward planning are key to the success of any business. The world is opening up and there are many opportunities out there, but if the global feeling of pessimism continues then change initiatives may become even more important and it's better to do something now than to hope that things simply improve.

How does this apply to the insurance industry?

As a foot note, the PwC survey can be interrogated to consider industries and territories. Looking at the responses for the insurance industry, it is interesting to highlight some of the main results:

  • 56% of insurance CEOs believe the rate of global economic growth will decline
  • 32% of insurance CEOs are very confident in their 12-month growth prospects for 2020 (down from 41% last year)
  • Unsurprisingly, 54% of insurance CEOs see over-regulation as the biggest threat to growth, followed by cyber threats, and speed of technological change
  • Only 13% of insurance CEOs cite significant progress in establishing an upskilling programme
  • 16% of insurance CEOs strongly agree that climate change initiatives will lead to significant new product and service opportunities (up from 5% 10 years ago).[3]

 

[1] https://www.pwc.com/gx/en/ceo-agenda/ceosurvey/2020/transcript.html

[2] https://www.pwc.com/gx/en/ceo-survey/2020/reports/pwc-23rd-global-ceo-survey.pdf

[3] https://www.pwc.com/gx/en/ceo-agenda/ceosurvey/2020.html

About the author

Tom has worked at RWA for over 12 years, starting as Operations Manager before taking on roles as Operations Director, CEO and most recently as Director leading the company into the digital age.

Before joining RWA, he was involved in helping develop the operations of one of Wales’ fastest growing utility consultancies as well as leading the Key Accounts team of a major commercial energy supplier.

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