UK CEO Outlook 2018: Growth headwinds - KPMG United Kingdom
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Growth headwinds

Business leaders cannot sit on the sidelines and watch. We need to be a force for change and draw on our missions and values to make a difference.

Dan Schulman

Three significant challenges to growth

In 2017 we found CEOs to be highly optimistic. Above all they were excited about the opportunities to drive growth by using disruptive technologies and new operating models to transform business performance.

That optimism continues.

But in 2018, it is tempered by a growing anxiety about external headwinds that could act as a significant drag on growth. Three in particular are front of mind - geopolitical volatility, cyber security risk and fast-changing customer expectations.

People have decided on Brexit. Our job is to understand what the new rules and regulations are. We need to be right on top of it and prepared to move as soon as those things are put in place.

Ken Allen
DHL Express

Geopolitics hits the boardroom

After years of consensus on globalisation, barriers to an open global economic order are being put back in place.

The potential withdrawal by some developed countries from international agreements, Brexit and growing US/China trade tensions are all part of a trend that’s proving an increasing concern for CEOs.

Indeed, 64% of UK CEOs (55% globally) see a return to ‘territorialism’ as the biggest threat to growth – a stark change from our findings last year when operational risk topped the agenda.

Such issues have hit the boardroom with force in the last year, changing the discussion between CEOs and fellow executives. In some cases, they are accelerating business transformation plans.

Brexit is acting as an accelerant to challenge the way we do business, where we do business, how we do business.

Sanjay Thakkar
Head of Deal Advisory
KPMG in the UK

Threats to growth: the risk landscape

Global CEOs

1 Return to territorialism
2 Cyber security risk
3 Emerging / disruptive technology risk
4 Environmental / climate change risk
5 Operational risk


1 Return to territorialism
2 Environmental / climate change risk
3 Emerging / disruptive technology risk
4 Cyber security risk
5 Brand risk

Source: 2018 Global CEO Outlook, KPMG International

The reality is that it is very difficult to be fully prepared for a cyber event … attackers are constantly adapting.

Bia Bedri
KPMG’s Cyber Security practice in the UK

Cyber certainty

Digital innovation might offer greater opportunity to transform performance, but it also brings increased vulnerability.

The challenge of cyber security will only increase as businesses embrace new technologies. Threats continue to evolve at an alarming rate. Cyber attackers constantly adapt their tactics. In addition, new technologies and business models can lead to new and unexpected cyber threats.

Globally, nearly half of CEOs (49%) say it’s now a case of ‘when’ not ‘if’ they will experience a cyber attack.

While just 39% of UK CEOs see an attack as inevitable, there’s an apparent paradox here. They also see themselves as less well prepared to deal with a cyber incident than CEOs elsewhere (39% against 51% globally) and less well prepared than they were (last year, 59% said they were fully prepared).

They are also less confident about their organisations being able to identify new threats (41% versus 60% globally).

A cyber attack is inevitable

Source: 2018 Global CEO Outlook, KPMG International

Invest in data and analytics that tell you about the motivations, life stages, interests and behaviours of customers. Put insight inside the innovation of new products and services.

Adrian Clamp
Head of Customer Advisory
KPMG in the UK

Changing customer expectations

CEOs know they need to build a new relationship with customers to achieve long-term growth. They need to appeal to future and existing consumers, offering personalised, end-to-end services, delivered in a connected way.

But a surprisingly high proportion of business leaders are struggling to get their customer strategy right. Hoped-for benefits from using technology to understand customer preferences are also proving elusive for many.

Globally, 25% of CEOs said they were not meeting customer expectations of a personalised experience – a figure that rose to 30% for UK CEOs.

Perhaps more worryingly, 44% of UK CEOs said investments they had made to create that personalised experience had not delivered the growth they’d hoped for (29% globally).

A key challenge is understanding the different demands and preferences of different generations – Millennials versus Generation X and Baby Boomer consumers.

Globally, 45% of CEOs say their organisations struggle to understand how the needs of Millennial customers differ from those of other generations. In the UK that number rose to 48%.