Climate change tops reinsurers worries
Arthur Wightman, PwC
Pandemics and health, cyber risk, tax and misinformation have been cited as the top challenges for business by PwC’s 24th annual Global CEO Survey.
Concern about pandemics and health overtook fear of overregulation as the top concern for chief executive officers (CEO) for the first time in 2021, with overregulation having been the persistent top concern for CEOs globally since 2014.
Cyber has climbed the ranks to become CEOs’ number two concern, cited by 47 percent of them globally in 2021, compared to 33 percent in 2020. Among Caribbean CEOs cyber was actually the number one concern, cited by 67 percent, followed by pandemics and health crises by 61 percent.
Nearly half of CEOs (49 percent) project increases of 10 percent or more in their digital spending, and less than half of this number are planning to boost their spending on cybersecurity and data privacy by 10 percent or more. A growing number of CEOs plan to use automation and technology to make their workforce more competitive, with 55 percent in the Caribbean, and 36 percent globally, looking to make such investments, more than double the number who said the same in 2016.
Meanwhile, the percentage of CEOs expressing significant concerns about climate change rose to 30 percent in 2021, from 24 percent in 2020, although the figure was lower for Caribbean CEOs at 24 percent. Another 27 percent of CEOs report being “not concerned at all” or “not very concerned” about climate change.
PWC reported a mood of relative optimism sweeping across global boardrooms, with 76 percent of business leaders predicting that economic growth will improve in 2021. The number is lower for Caribbean region CEOs, with 69 percent saying they believe global economic growth will improve.
The percentage of CEOs expressing confidence in growth is up from 22 percent in 2020 and 42 percent in 2019, representing the highest level of optimism since the survey started asking this question in 2012.
Meanwhile, the US extended its lead over China as the top destination for growth, with 35 percent of CEOs looking to the US for growth over the next 12 months, compared to only 28 percent looking to China, opening up a gap that had been only one percentage point in 2020.
There are, however, plenty of factors to temper this optimism. Along with concerns about global physical and cyber security, there was a sharp increase in concerns about the spread of misinformation, cited by 28 percent of CEOs. The figure was up from 16 percent in 2020, after a year that saw accusations of fake news, disputed elections and mixed messages affecting the global pandemic response.
Tax policy, a concern for only 19 percent of CEOs in 2020, rose into the top ten list in 2021, after being cited by 31 percent of CEOs.
Six out of ten global CEOs believe their organisations’ tax obligations will increase as governments address rising debt - in the Caribbean region the figure was slightly lower at 57 percent. Caribbean CEOs were more likely to see this as an opportunity to reconsider their cost structures, at 82 percent, compared to 65 percent globally.
More than a third of CEOs (36 percent) said they are “very confident” about their organisation’s prospects for revenue growth over the next 12 months, up from 27 percent in 2020, but there is wide variation across industries. The technology and telecommunications sectors were most confident 45 percent and 43 percent, respectively), with transportation and logistics (29 percent) and hospitality and leisure (27 percent) among the least confident.
Arthur Wightman, PwC Bermuda leader, argued that confidence has been buoyed by the rollout of vaccines in many parts of the world, including in Bermuda. While he cautioned it remains too early to predict how rapid the recovery will be, “it's certain that we will not return to the way things were,” he said.
Wightman called on CEOs to develop a different mind-set and to address a broader range of issues that will affect company value over time, such as sustainability, social inclusion and other environmental, social and governance (ESG) opportunities. “It’s vital that businesses meet these expectations if they are to build and sustain consumer trust,” he warned. “The organisations that rise to these challenges will emerge stronger, more resilient and able to steer successfully through this period of momentous change.”
PwC’s 24th Annual Global CEO Survey polled 5,050 CEOs in 100 countries and territories over January and February 2021.
Pandemics, PWC, Cyber, Regulation, Arthur Wightman