KPMG InternationalGrowth strategies in turbulent 2022 CEO OutlookContentsFinding opportunity in uncertaintyEnvironmental,social and governance(ESG)Economic outlook Conclusion T echnology Methodology and acknowledgments03 1605 2109 23Talent 13 2022 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Finding opportunity in uncertaintyTested by enormous challenges in quick succession a global pandemic,inflationary pressures and geopolitical tensions its encouraging that CEOs,surveyed in our 2022 CEO Outlook,were confident in their companies resilience and relatively optimistic in their own growth prospects.While its unsurprising the economic climate is now a top concern for business leaders,over these past few years,theyve learned to navigate the unpredictable,realigning their workforces,untangling supply chain disruptions and adapting to geopolitical and economic impacts.As the possibility of recession looms,many are already prepared with a deep focus on planning and agility.And some see opportunities through this fog of uncertainty brought on by the promise of technology,talent and ESG.Unless otherwise indicated,throughout this report,“we”,“KPMG”,“us”and“our”refer to the network of independent member firms operating under the KPMG name and affiliated with KPMG International or to one or more of these firms or to KPMG International.KPMG International provides no client services.No member firm has any authority to obligate or bind KPMG International or any other member firm vis-vis third parties,nor does KPMG International have any such authority to obligate or bind any member firm.Bill ThomasGlobal Chairman and CEOKPMGThe 2022 CEO Outlook draws on the perspectives of 1,325 global CEOs across 11 markets to provide insight into their 3-year outlook on the business and economic landscapes.The survey also reveals shifts in strategy and viewpoints from the KPMG CEO Outlook Pulse Survey,conducted ahead of the Russian governments invasion of Ukraine.T echnology Talent Conclusion ESG Methodology and acknowledgmentsEconomic outlookFinding opportunity in uncertaintyKPMG 2022 CEO Outlook 3 2022 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Four key themes emerge from this years CEO Outlook:Economic outlookCEOs are ready and prepared to weather current geopolitical and economic challenges while still anticipating long-term global growth.Optimism in growth remainsDespite geopolitical and economic challenges,global economic confidence over the next 3 years has rebounded from early 2022,rising to 71 percent.Preparing for a recessionEighty-six percent of CEOs believe a recession over the next 12 months will happen,but 58 percent feel it will be mild and short and 76percent have plans in place to deal with it.Managing geopoliticsGeopolitical uncertainties will likely continue to impact strategies,with 81 percent of CEOs adjusting or planning to adjust their risk management procedures.TechnologyCEOs are directing digital investment to areas of their business that drive growth,with an emphasis on partnerships and preparedness.Emerging tech top growth riskDisruptive technology has emerged as the number one risk to organizational growth.Staying on the right trackMore than ever,investment should be tied to growth and 70percent of CEOs say they need to be quicker to shift investment to digital opportunities and divest in those areas where they face digital obsolescence.Cyber as a strategic functionThe cyber environment is evolving quickly and 77 percent see information security as a strategic function and a potential source of competitive advantage.T alentCEOs are changing how they support and attract talent,and their efforts are buoyed by a focus on their people and experimenting with ways of working.Talent a top operational priorityIn the long term,the employee value proposition to attract and retain the necessary talent is tied as the top operational priority to achieving 3-year growth objectives.Recession driving short-term freezesIn the short term,39 percent of CEOs have implemented a hiring freeze,and 46 percent are considering downsizing their employee base over the next 6 months.Fostering a spirit of experimentationRemote working has had a positive impact on hiring,collaboration and productivity over the past 2years,but 65 percent of CEOs see in-office as the go-to office environment over the next 3 years.ESGCEOs are balancing the need to build resilient and transparent ESG plans with the possibility of having to pause or reconsider their approaches.Accelerating ESG expectationsCEOs increasingly agree that ESG programs improve financial performance,sitting at 45 percent,up from 37 percent 1 year ago.ESG impact on supply chainsCEOs increasingly see reporting and transparency as important to their ESG goals and this includes insight into their broader supply chain.Diversity ramping up progressGlobal businesses are seeing major focus put on the social aspect of ESG:68 percent of CEOs believe progress on inclusion,diversity and equity(IDE)has moved too slowly in the business world,and 73 percent believe scrutiny of IDE performance will continue to increase over the next 3 years.T echnology Talent Conclusion ESG Methodology and acknowledgmentsEconomic outlookFinding opportunity in uncertaintyKPMG 2022 CEO Outlook 4 2022 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.August2022February2022August2021February2021August2020February202071%60%60%42%32%68%Optimism in long-term growth remainsThe KPMG 2022 CEO Outlook surveyed global CEOs on their 3-year outlook on the business and economic landscapes.Despite geopolitical and economic challenges,global economic confidence over the next 3 years has rebounded from early 2022,rising to 71 percent.As companies continue to navigate the changing landscape resulting from the COVID-19 pandemic,85 percent of global CEOs report positive growth expectations in 2022;steady from earlier this year and down slightly from 2021(87 percent).Growth prospects for the global economy over the next 3 yearsSource:KPMG 2022 CEO Outlook T echnology Talent Conclusion ESG Methodology and acknowledgmentsFinding opportunity in uncertaintyEconomic outlookEconomic outlookKPMG 2022 CEO Outlook 5 2022 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.CEOs anticipate a recession but theyre preparedWhile confidence is up over the next 3 years,CEOs anticipate challenges in the shorter term.Nearly nine out of 10(86 percent)CEOs believe a recession will happen over the next 12 months,but three out of five(58 percent)feel it will be mild and short and 76 percent have plans in place to deal with it.In spite of short-term recession fears,the increased confidence CEOs have for the longer term indicates they feel well prepared to navigate their businesses through turbulent times.In fact,when asked about their confidence in the resiliency of the global economy over the next 6 months a period likely to be fraught with uncertainty and constant change 73 percent still had a positive outlook,up 13 percentage points from February 2022.While CEOs may be resilient,theyre also realistic about the challenges ahead.Seventy-three percent of CEOs believe a recession will upend anticipated growth over the next 3 years,and three-quarters(75 percent)also believe a recession will make post-pandemic recovery harder.Seventy-one percent of CEOs predict a recession will impact company earnings by up to 10 percent over the next 12 months.Compared to 2019 and 2020,CEOs are better prepared to weather short-term challenges with resiliency measures in place,while still anticipating long-term growth.The top three steps include:boostingproductivity(50 percent),managing costs(43 percent)and reconsidering digital transformation strategies(40 percent).Top risks looking forwardPandemic fatigue and economic factors including the threat of rising interest rates and inflation top the list of most pressing concerns for CEOs today at 15 percent and 14 percent,respectively.As we look to the next 3 years,risks are more interconnected than ever.Emerging technology(not seen in the top five last year)rises in rank as the top risk and greatest threat to organizational growth.Operational,regulatory and reputational concerns also jumped into the topfive.86%believe there will be a recession in the next 12 months58%say any anticipated recession willbe mild and shortRisks to growth over the next 3 yearsSource:KPMG 2022 CEO OutlookEmerging/disruptive technologyOperational issuesRegulatory concernsEnvironmental/climate changeReputational riskAugust 202212345Cyber securityRegulatory concernsTaxEmerging/disruptive technologySupply chainFebruary 202212345 T echnology Talent Conclusion ESG Methodology and acknowledgmentsFinding opportunity in uncertaintyEconomic outlookKPMG 2022 CEO Outlook 6 2022 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Managing geopolitical riskStrategic alliances(26 percent),organic growth(22percent)and managing geopolitical risks(20percent)top the list of the most important strategies for achieving organizational growth objectives over the next 3 years.CEOs indicate that geopolitical uncertainties will continue to impact their strategies and supply chains over the next 3 years.In fact,81percent of CEOs have adjusted or plan to adjust their risk management procedures considering geopolitical risk,and 21 percent of CEOs will be increasing measures to adapt to geopolitical issues to achieve their growth objectives.With geopolitics a key agenda item in 2022,CEOs need to be knowledgeable on the subject and howto navigate the risks.Its important to make a geopolitical risk assessment part of their overallstrategy.Strategies important for achieving growth objectives over the next 3 yearsStrategic alliances with third partiesOrganic growth(i.e.innovation,R&D,capitalinvestments,new products and recruitment)Managing geopolitical risksM&AJoint ventureOutsourcing26%22%20%11%11%9%Source:KPMG 2022 CEO OutlookThe pandemic and the events in Europe have shown us how interconnected we are as a world.To me,geopolitical issues are the number one risk.I think we all need to build optimized and resilient supply chains.TV Narendran Chief Executive Officer and Managing Director Tata Steel T echnology Talent Conclusion ESG Methodology and acknowledgmentsFinding opportunity in uncertaintyEconomic outlookKPMG 2022 CEO Outlook 7 2022 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.One of the key learnings from the last year for TV Narendran,CEO and Managing Director of Tata Steel,has been the importance of building supply chain resilience,brought to the forefront of the business agenda following the pandemic and geopolitical uncertainties.“The pandemic and the events in Europe have shown us how interconnected we are as a world,”he says.“To me,geopolitical issues are the number one risk.I think we all need to build optimized and resilient supply chains.”Although a resilient supply chain may not be the most cost efficient,he believes disruption and change can bring opportunity.“There are opportunities to rethink business models and operating models,as well as build the necessary green infrastructure.”Increasing M&A appetiteOver the next 3 years,M&A appetite remains high despite economic concerns.Forty-seven percent of CEOs have high appetite,and 38 percent moderate,a significant shift from 23 percent high appetite in early 2022.With higher interest rates and borrowing costs,rapid innovation will be key to staying competitive.Deal makers may be taking a much sharper pencil to the numbers and focus on value creation to unlock and track deal value,every step of the way.The combination of uncertainty,delays and price fluctuations is forcing some executives to significantly shift their priorities and pivot their business models,in an attempt to maintain their growth and confidence as they enter an incredibly challenging period.Regina MayorGlobal Head of Clients and Markets KPMG T echnology Talent Conclusion ESG Methodology and acknowledgmentsFinding opportunity in uncertaintyEconomic outlookKPMG 2022 CEO Outlook 8 2022 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Digital transformation in uncertainty Talent Conclusion ESG Methodology and acknowledgmentsEconomic outlookFinding opportunity in uncertainty T echnologyKPMG 2022 CEO Outlook 9 2022 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Emerging technology lands as top growth riskCEOs are keeping technology risk front of mind in the short and long term.Disruptive technology has emerged as the top risk and greatest threat to organizational growth over the next 3 years.And while pandemic fatigue and economic factors like rising interest rates and inflation are top of mind over the next 6 months,emerging and disruptive technology is a close third.In the face of these risks,CEOs continue to prioritize digital investment with 72 percent agreeing they have an aggressive digital investment strategy,intended to secure first-mover or fast-follower status.Furthermore,advancing digitalization and connectivity across the business is tied(with attracting and retaining talent)as the top operational priority to achieve growth over the next 3 years.This focus on digital transformation may be driven by increasingly flexible working arrangements and heightened awareness of cyber security threats,exacerbated by geopolitical uncertainty.At Fujitsu Limited,CEO Takahito Tokita is on a mission to transform the organization from a traditional IT company into a purpose-driven digital experience organization.“We have always been confident in our technology and innovations,but in our conversations with clients,we realized they needed more than just products they needed integrated,value-adding capabilities to help advance their own digital transformations.I said that we would change from an IT to digital experience company to meet that demand and reflect a sense of urgency that we are not going to be a company that just follows old traditions.”Staying on the right trackThe anticipated recession may be pushing businesses to reconsider their strategies over the short term.Four out of five CEOs note that their businesses are pausing or reducing their digital transformation strategies to prepare for the anticipat