by Marc Wilczek

Lack of cybersecurity is the biggest economic threat to the world over the next decade, CEOs say

Aug 21, 2019
Digital TransformationIT StrategySecurity

As digital transformation continues apace, CEOs see cybersecurity as the number one threat to the global economy in the next decade.

In its 2019 CEO Imperative Study, Ernst & Young surveyed 200 global CEOs from the Forbes Global 2000 and Forbes Largest Private Companies across the Americas, Europe, the Middle East, Africa, and the Asia-Pacific region. Also interviewed were 100 senior investors from global firms that manage at least $100 billion in assets.

However, regardless of their location, CEOs, board directors and institutional investors cited national and corporate gaps in cybersecurity as the biggest threats to business growth and the global economy. Income inequality and job losses stemming from technological change came second and third in the list of threats, while ethics in artificial intelligence and climate change respectively rounded out the top five.

The cybersecurity finding has far-reaching and disruptive implications for the future of work, consumer trust and government regulation.

“Future corporate growth depends on trust, whether between corporations and customers, people and technology, or management and employees. The increasing risk of cyber-attacks and the failure to find the right balance of digital and human in the workplace damages trust in all these critical dimensions,” says Gil Forer, EY Global Markets Digital and Business Disruption Lead Partner.

Tipping point

While the risks are very real, the study found that CEOs aren’t fazed. They actually see more upside in taking action to address and solve these global challenges. Half of the chief executives believe the top-tier players are obliged to do their part because, in many cases, not doing so could spell disaster.

“The world’s largest companies have to be engaged,” says Bala Swaminathan, Asia Advisory Board member for Westpac Banking Corporation. “It’s not whether you grow or you don’t grow. It’s a question of whether you exist or you don’t exist.”

Two-thirds of the CEOs surveyed reported that they were likely to speak out publicly about the biggest problems facing the world.

“We have arrived at a tipping point in corporate action on global challenges which will have a powerful impact. The world’s largest companies are set to undertake a range of meaningful actions to address global challenges such as income inequality, the ethics of AI, cybersecurity, and climate change,” the report said.

Most of the CEOs surveyed say they’re tweaking their corporate missions to place greater emphasis on targeting societal problems. Directors are also looking at partnering with governments or non-government organizations (NGOs). Just under half of the respondents had implemented a corporate reporting framework that included non-traditional values or were active members of industry coalitions.

C-suite is ill-prepared to meet coming demands

The long list of internal challenges starts at the top. Only one-third of respondents (34%) believe the current C-suite model is ready to meet the demands and opportunities of the next decade. But many CEOs and boards have been working to change this by adding new positions such as chief innovation officer, chief digital officer and chief strategy officer.

But further changes are in the works. Some 72% of CEOs expect to add new positions or change C-suite roles. Some 82% of boards say the same thing.

According to the CEOs, the top five new C-suite capabilities critical to continued growth are digital transformation (55%); innovation (53%); artificial intelligence (43%); data science (33%); and behavioral science (25%).

Investors want long-term value more than short-term returns

In the survey, investors also ranked the incorporation of global challenges into corporate mandates as their number-one priority for CEOs. Almost half (43%) said that a CEO’s top priority should be to link internal governance, performance measures and rewards to solutions to the most pressing problems plaguing the modern world.  

Investors are also paying more attention to how companies respond to global challenges and to the degree to which the company actually dedicates resources to global problem-solving., The lion’s share of investors (60%) back long-term investments that tackle global challenges, if these investments take a bite out of near-term performance.

This investor focus is poised to grow. Looking forward, 83% of institutional investors say that the responses of large enterprises to global challenges will play an even larger part in their investment decision-making in next five years.

“CEOs, boards and investors recognize they have a role to play — along with the public sector — in addressing social challenges that speak to their values and in pursuing inclusive, sustainable growth,” Carmine Di Sibio, EY global chairman and CEO, said in a recent press release. “It’s encouraging to see signs of support within the investment community for long-term value creation.”