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CEOs In Asia Pacific Most Concerned With Supply Chain Risks, Finds KPMG Survey

  • 66 percent of CEOs in ASPAC stated their supply chains have been under increasing stress over the past 18 months
  • 59 percent confident about the growth prospects of the global economy over the next 3 years

PETALING JAYA — A global survey conducted by KPMG International found that 59 percent CEOs in Asia Pacific (ASPAC) are more confident about economic recovery compared to earlier this year, however they are also increasingly concerned by the risk to their supply chains.

The KPMG 2021 CEO Outlook surveyed more than 1,300 global CEOs about their strategies and outlook over a 3-year horizon. Among almost 500 CEOs in Asia Pacific, 66 percent of CEOs in ASPAC stated their supply chains have been under increasing stress over the past 18 months. It is thus unsurprising that CEOs ranked supply chain risk as their top threat to growth this year.

Datuk Johan Idris, Managing Partner of KPMG in Malaysia, observed, “Pre-pandemic, risks to the supply chain had been steadily gaining attention due to increasing volatility from trade tensions and climate-driven events but were still considered a low priority for CEOs. However, the pandemic brought this issue into sharper focus as organization struggled to maintain supply chain continuity during worldwide lockdowns.”

Top three threats to growth ranked by CEOs in ASPAC

Source: 2021 Global CEO Outlook, KPMG International
Rank  2021  2020  2019

1

 Supply chain risk  Talent risk  Environmental/climate change  risk

2

 Cyber security risk    Supply chain risk  Emerging/disruptive technology  risk

3

 Emerging/ disruptive technology  risk  Return to territorialism & cyber security  risk  Return to territorialism

 

Asia Pacific CEOs continue to recognize the importance of building resilient, flexible supply chains. 36 percent have stated an intention to monitor deeper into their supply chain to better anticipate potential problems, while 34 percent will diversify sources of input by adding new locations of inputs to make their supply chain more resilient. Meanwhile, 14 percent will prioritize reconfiguring their supply chain to provide greater resiliency and more consistent access to achieve their growth objectives.

Other key findings within Asia Pacific

  • Scrutiny on Environmental, Social and Governance (ESG) continue to rise

70 percent of CEOs said that they face increased demands from stakeholders for more reporting and transparency on ESG issues, with pressures predominantly coming from institutional investors (57%) and regulators (31%). However, 42 percent stated that a key challenge when communicating their ESG performance to stakeholders is the struggle to create a compelling ESG story.

  • Reaching net zero with government support

81 percent believe that government stimulus will be required if all businesses are to reach net zero. Roughly the same percentage (80 percent) agree that large corporations have resources to help governments find solutions to pressing global challenges, which showcases that CEOs recognize that greater public-private partnerships are needed to better address ESG issues.

  • Changing sentiment on the future of work

Just 18 percent of CEOs now say they are planning to downsize, or have already downsized, their organization’s physical footprint. This is a dramatic shift from August 2020 where 75 percent stated their intention to downsize their space. CEOs are focused instead on providing increased flexibility for their workforce with 41 percent looking to invest in shared office spaces. Furthermore, 34 percent will look to implement a hybrid model of working for their staff, where most employees work remotely 2–3 days a week.

  • People-powered digital agility

While 68% of CEOs are placing more capital investment in buying new technology, they are also looking to build human capability with 49 percent planning to invest in digital training, development and upskilling to ensure employees’ skills remain future-focused.

“It is evident that our combined experience over the past years have continued to prepare us in imagining what our new reality would look like. A major lesson is the need to change our ways and work together. Successful CEOs will be those that connect a trusted purpose with digital agility to drive growth and prosperity,” concluded Datuk Johan. Learn more about the KPMG 2021 CEO Outlook at kpmg.com.my/CEOoutlook.