AI Changes CEOs’ Risk Environment:

Q&A with Andrea Guerzoni of EY

EY, a professional services organization, just published the most current CEO Outlook Pulse Survey.

Based on the company’s quarterly poll, which was finished in August by 1,200 worldwide executives and 300 institutional investors, it presents business leaders’ projections for the strategies and drivers of future growth.

According to the survey, CEOs view disruptive technology, such as artificial intelligence (AI) that is altering consumer behavior and macroeconomic uncertainty, as major disruptive factors in the face of a corporate landscape that is changing quickly.

Andrea Guerzoni, global vice chair of strategy and transactions at EY, explains the findings and their implications for the perception of emerging technologies in this Q&A.

AI Enterprise: What does the EY CEO Outlook Pulse study intend to achieve?

Guerzoni Andrea: The primary trends and advancements that business executives are thinking about and that have an impact on the top firms in the world are measured by the EY CEO Outlook Pulse survey. In order to give a representative global snapshot of expectations towards growth and long-term value in connection to the external global business landscape and capital markets, a poll of 1,200 executives from significant companies worldwide was conducted. It is a component of the larger EY CEO Imperative series, which addresses the CEO agenda in its entirety.

In the latest CEO Outlook survey, EY introduced the CEO Confidence Index by quantifying CEO sentiment across various economic and business dimensions. The survey revealed one clear finding – CEO confidence has a clear impact on and a strong correlation with activity. Confident executives are prepared to make bold decisions and much more willing to be proactive than those who aren’t.

What role do emerging technologies play in the complex landscape CEOs need to make risk-based decisions about?

Emerging technologies are one of several disruptive forces impacting the external environment for CEOs. These forces are complex and highly intertwined. They are also shaping “a new normal” for CEOs – an era of continuous disruption, volatility and change. As such, CEOs are starting to shift in mindset towards risk and converting what would traditionally be seen as “challenges” into opportunities for growth and expansion.

CEOs have until now struggled to keep up with the fast-moving environment – less than four in 10 (38%) surveyed considered themselves ahead of the curve. However, there is a growing cluster of confident CEOs and business leaders out there now who view this incredibly complex environment as a chance to turn disruption into an advantage, get one step ahead of the game, grow faster than the competition and find smarter ways of working – with emerging technologies playing a central role here.

For example, emerging technologies may help a CEO change the shape of their company’s operations or customer experience, reacting to customer needs, or support them in taking a faster, more proactive and data-driven approach towards risk and portfolio reviews.

The report recommends CEOs adopt a “digital twin” approach using AI for predictive analysis. What does this involve?

Digital twins virtual models or replicas of physical objects, systems or processes – enable organizations to simulate real-world scenarios and outcomes, helping them make better-informed decisions.

With the emergence of AI, advanced data and analytics, CEOs can and should leverage the potential of digital twins across the business to leverage deep insights into asset operations, provide predictive analytics to estimate future market movements and help CEOs make more informed and accelerated decisions about their portfolios.

The poll unequivocally demonstrates that CEOs’ access to data is a problem that may be impeding the portfolio review process, and the report also emphasized the importance of fundamental data to portfolio analysis. When applied properly, digital twins can help partially address some of this.

What did the poll find out about CEO trust in emerging technologies and how they weigh opportunity against risk?

CEOs understand the importance of emerging technology to their company’s survival and success. As the importance of new technology in the external world becomes more apparent, so does the impact it is having on other disruptive forces including supply chain, cost, geopolitics, and customer behavior. Chief Executive Officers taking a balanced and pragmatic approach towards it.

We are seeing them shift from a reactive footing to a more proactive one – nearly a quarter of CEOs find portfolio reviews too reactive – and plan to use technology to help them get ahead of the game; 38% of CEOs plan to use emerging tech to implement better ways of working, deliver innovation or explore new competitive business models.

This is particularly the case for more confident CEOs who are actively using emerging technologies to shape their growth strategies and confidently manage risks. Their confidence in these technologies leads to a stronger pursuit of opportunities that can transform their businesses.

Did the report highlight any other interesting observations about emerging technologies?

The report highlights that emerging technology is still viewed globally as the main disruptive force 38%. However, this varies by region, with America placing it as the least disruptive force (30%), instead placing changing customer behaviour a top challenge, compared with Europe where 40% of CEOs cite it as the top disruptive force.

Regardless of where CEOs rank disruptive technology, it remains a top concern and CEOs are prioritizing the likes of AI as a transformative tool to drive innovation, efficiency and competitive advantage.

In order to adjust to the constantly shifting consumer behavior and macroeconomic uncertainty, CEOs especially confident CEOs are investing in artificial intelligence (AI) and other emerging technologies. This strategic focus stems from the need to remain relevant and competitive in an industry that is being continuously transformed by technology breakthroughs, as well as a fear of falling behind.

To keep a competitive edge and promote long-term growth for their company as a whole, CEOs should therefore constantly review and adjust their portfolios, searching for new ways to create value through emerging tech. These could include investing in or forming strategic tech partnerships.