New Zealand CEOs are significantly more positive about the outlook for the global economy over the next 12 months than their global peers, according to PwC
’s Annual Global CEO Survey
The New Zealand supplement, released late last week, shows that 63% of New Zealand CEOs surveyed believe the global economy will improve in the next 12 months, compared to just 44% globally. Additionally, 89% were either somewhat or very confident of their revenue growth prospects in the coming twelve months.
However, Insurance Council of New Zealand CEO, Tim Grafton, warned that caution was still needed.
“New Zealand insurers are positive about strong economic growth in New Zealand particularly around the massive capital injection they are providing for the Canterbury rebuild in the year ahead, but would be relatively more cautious about the global environment where significant challenges remain even six years after the global financial crisis,” he told Insurance Business
According to the survey, CEOs, both in New Zealand and globally, identified technological advances (New Zealand 91%), demographic changes (New Zealand 74%) and shifts in global power (New Zealand 49%) as the three trends most likely to impact their business over the next five years.
“Together these trends will create many opportunities for innovation and growth, but they will also raise new challenges for traditional business models. Businesses without the ability to adapt and evolve will struggle in a world that is changing at such an unprecedented pace,” said PwC
New Zealand CEO, Bruce Hassall.
Grafton agreed technological change would offer both opportunities and challenges around distribution channels as well as new markets and improved tools for pricing risk.
This speed of all this change means CEOs are finding it increasingly difficult to commit to long-term planning horizons, the survey said. While 77% of New Zealand CEOs who took part in the survey see five years as the ideal planning time horizon, most (43%) are currently working to a three-year plan.
Another challenge identified by New Zealand CEOs is the balance between innovation and regulation.
Most CEOs recognise the need for innovation to keep up with changes in customer behaviours and demands but see changes to the regulatory environment as significant inhibitors to growth.
Seventy one per cent of New Zealand CEOs were either somewhat or very concerned about the threat of over-regulation to their organisation.
Grafton said: “Regulatory challenges especially around the impact of capital requirements on investors’ appetites and premiums will remain high on the radar.
“While insurers support well-regulated markets that support competition and provide policyholders with protections, getting the balance wrong can result in unintended and undesirable consequences that can impact growth and the affordability of insurance for some,” he said.
Hassall says that with so much change happening, a key challenge for CEOs is how they bring people along with them.
“We are seeing big changes in the stakeholder environment. Businesses recognise that society, as a whole, needs to feel positive about an organisation. This means getting the balance right between making money, contributing to sustainable business practices, and generally being a good corporate citizen,” he said.
“Tomorrow’s businesses need to think beyond traditional stakeholders such as customers, staff and investors and bring communities and the Government on board with their growth aspirations.”