Jessica Fino 13 Jun 2017 11:36am

Reputational risk tops CEOs' worry list

UK chief executives have named reputational and operational risks as their biggest concerns, a significant shift from last year when neither category featured in their top 10 list of challenges

The change reflects the heightened scrutiny of business practices by government and the public, according to KPMG’s Global CEO Outlook Survey.

It found that UK CEOs were most concerned about operational risk (35%), reputational risk (34%) and the risks presented by emerging technology (32%).

Furthermore, 54% of the UK CEOs interviewed believe their business would grow just 0.01-1.99% per annum over the next three years.

Meanwhile 74% of them said that increases in inflation meant they would have to pass on increased costs to their customers.

More than half (58%) said they were planning to invest in innovation over the next three years, while 74% confessed to spending more time scenario planning following the uncertain geopolitical climate.

In fact, chief executives are now hiring experts to help them understand geopolitical risk, with seven out of 10 already recruiting new specialists into their management teams to help them plan for the future and mitigate political risk.

Bill Michael, chair-elect at KPMG in the UK, said, “Closing the book on new staff training while future growth is uncertain may seem sensible, but it risks throwing future opportunities away.

“Although the UK stock market has reached an all-time high and economic growth is picking up, companies are still resistant to open up their cheque books. The financial crisis was a chastening experience for many and has left some business leaders inherently risk averse and unwilling to invest in anything but the tried and tested products and technology.

“However, this cautious approach could see British businesses risk missing out on new opportunities, which will instead be seized by their international counterparts who are investing now.”

Meanwhile, 60% of the CEOs inquired said they had not invested in emerging technology over the last year, and 58% have no plans to do so over the next 3 years.

The report also found that only one in ten CEOs in the UK listed the development of talent as a priority for their business over the next three years, while 95% of them said they believed their successor will be a man, despite efforts to increase diversity in boardrooms.