C-Suite Outlook 2025: What Risks Are Leaders Watching?

Dana Peterson: Hi, Steve.  

Overview of the C-Suite Outlook Survey 

Steve Odland:So Dana, let's start with the survey itself. How long have we been doing this? When was this one fielded? How many respondents, where were they? And so forth.  

Dana Peterson: Sure. We've been running the survey since 1999. So that means we're in our 26th year, and we had 1,722 C-Suite executives and board members responding to the survey—including, we actually had 508 CEOs spanning the globe. So we had very good representation. We also covered various economies, so, of course, the US and Canada. But for Europe, we focused on Italy, Germany, France, and the UK. And for Asia, we had a huge focus on China, India, and five ASEAN economies.  

Steve Odland: So, these were really senior people, and they were, these are the really important countries that contribute to the global GDP. Soit's really a great turnout in this survey. 

Top-Line Results and CEO Concerns 

Steve Odland:So what were some of the top-line results?  

Dana Peterson: Sure. I think number one, despite all the challenges, CEOs are still looking for growth, and they're excited about finding ways to increase revenues. But certainly, there are a number of challenges for them this year.They'revery focused on AI technology in terms of adoption. They're seeing some benefits, but they also are challenged by obtaining the full benefits.  

There's a big focus on rising geopolitical tensions, especially between the US, the European Union, and China. Surprisingly, there's still a lot of concern about slowing and/or recession in the global economy, and that's notable because, back in 2023, that's when everybody thought we were going to have a global recession, and importantly, the US was going to have a recession. We didn't have a global recession. The US did very well in '23 and 2024, but you still have this angst globally and also in the US about the economy.  

There's also a lot of concern about regulatory burdens. Certainly, the EU has a very strong regulatory environment. The US does, also. And companies are very worried about that. And then there's sustainability, and sustainability is a big issue, especially in Asia, as well as for Europe, in terms of how the companies certainly comply with net zero goals that countries have committed to, but also just, the give and take in terms of how strongly various societies feel about it. 

And I think in terms of the internal issues, number one, I mean, companies are still very concerned about attracting and retaining talent. That's just the biggest issue for them, and they're concerned about the costs of doing that, and they're citing labor costs as being a major issue. 

But on the upside, they are, again, as I said, using AI, and they're also looking at marketing, increasing their marketing and communications budgets for allowing growth and promoting growth, especially in the face of the many challenges that they'll have in 2025.  

Steve Odland: So that's all, that's a lot. And we'll break down many of those subjects as we go along here. You know, it is interesting, Dana, that we'd still had this angst about a potential recession when in fact, it hasn't shown up.  

Geopolitical and Economic Challenges 

Steve Odland: Did you see any geographic differences in that angst?  

Dana Peterson: Well, we saw a lot of the angst in a group we called Other Asia, and that includes China. And that's actually understandable, even though China year after year publishes growth close to 5% because that's a political and economic goal, but there's still a lot of challenges in China. Certainly, they still have the ongoing housing crisis. Domestic demand is in a slump. Consumers are unhappy. And so much of the growth that we've seen has come from focus on producing products and exporting products having to do with the energy transition, and also lots of monetary and fiscal policy expansion and stimulus. 

Sothere's still that underlying concern about recession there, even though, on paper, and at the end of the day, China doesn't have, never has a recession, other than certainly the pandemic. And then the US, I was actually very surprised by that sentiment, especially because I know that, heading into 2023, there were concerns that yes, the US is going to go back into recession. Inflation, super high. The Fed's hiked rates dramatically. Consumer debts piling up. But nonetheless, we never had a recession in 2023 or 2024 because of the labor market. Consumers were still working, and they had income, and they also had savings, and they used a lot of that to spend. 

And also in the US, you had industrial policies that bolstered not only government's spending, but also private investment associated with reshoring and building out infrastructure and investing in chips and R&D. 2024, likewise, a really good story for the US, so that's why I was surprised.  

But I think maybe some of it's a function of which industries think they're going to benefit under the next—well, the new administration. Tech companies are really excited, as well as financial services, because you might have lots of deregulation. There could be some tax cuts here and there. Other industries that have benefited a lot from the industrial policies have questions. Certainly construction, the materials, manufacturers.  

And then there's also concern about whether or not we're going to see an intensification of the ongoing trade war and what that will look like.So there's really a lot of mixed feelings out there. I think that's where most of the concerns about recession or slowdown are focused.  

Steve Odland:Yeah, and we've heard from our other research that there's continuing concern about inflation in the marketplace, elevated prices that haven't come down, and then, most of the inflation has been moderated, but it's still inflating over high prices. 

Do you think that that contributed to some of this angst?  

Dana Peterson: Well, I'm not sure that's an issue for companies because the complaints they had about inflation were related to labor costs, and labor costs are high almost across the board because you have demographic issues. So baby boomers are retiring in the US. It'sroughly 10,000 a day. Europe has negative population growth. China has seen a massive decline in the number of available workers who aren't children or retired. And so that's all putting pressure on the labor market. So most of the inflation is there. And, in fact, in terms of growing, very few CEOs indicated that they were going to raise prices to grow. 

And I think that sentiment was maybe mainly in Japan, but for the most part, companies are not looking to raise prices to grow. So I think that'ssomewhat constructive for consumers, but I think the main issue for consumers is not so much that inflation is rising quickly, as it was a few years ago, but that the level of prices are elevated relative to what they were prepandemic. 

Regional Differences in Economic Sentiment 

Steve Odland: OK. Solet's shift to the external factors. What are CEOs telling us? First of all, globally, and then in the US specifically, about the external factors that they're going to face in this 2025 year.  

Dana Peterson: Yes. So we actually took that question in terms of external factors and split it up because we want to get a little bit more insight. 

So I want to talk about geopolitical, economic, policy, societal, and ESG. So for geopolitical concerns, the number one thing businesses were concerned about were relations, or rather tensions, between the US, Euro area, and China, and a lot of it has to do with competitiveness around trade, around technology. 

And we're noticing that there are more actions by those three giant regions along the lines of trade and restricting investments in certain areas or in certain products. And the second after that is just general global political instability, and third was political uncertainty in terms of how these things, these tensions, plus the instability politically, will affect your operations across the world. 

So those are the big things that businesses were concerned about. In terms of economic conditions, we already mentioned it: economic downturns slash recession, but also higher labor costs. And third was inflation. So yes, inflation is a concern all around for companies, but they ranked labor costs higher. 

And then they also said labor shortages are a big issue, plus fiscal policy. In terms of policy and globalization, regulation, number one, was a big concern, and it was especially notable for the US, as well as Europe and certain parts of Asia.  

When it comes to societal issues, I don't know if this is good or bad, but they said rapidly advancing AI technology. They see that as something that's going to affect, some external factor that's going to affect how they do operations. So you can look at that as, well, things are moving so quickly, we don't have time to catch up. Or this is great, we're going to get to the point where I can really be useful for our business. But there was also big concerns about demographic changes, which I talked about a little bit because of the implications on the labor market. 

And then finally, when it comes to ESG, sustainability was very important for companies. And indeed, in Asia, sustainability ranked very highly, as well as parts of Europe.  

Steve Odland: Now there are these ongoing geopolitical hot spots. Of course, you still have the ongoing war in Ukraine. You've got the Middle East situation still bubbling, and you do have this tension in the South China Sea. 

What did we hear from CEOs? And did the concerns differ geographically from them?  

Dana Peterson: Sure. So overall, in terms of external geopolitical risks, the conflict in the Middle East was only a concern for CEOs—12.4% of CEOs. And then the war in Ukraine was relevant. only for 7.8. Now, yes, there were definitely regional differences.So the US was highly concerned about the war in Ukraine—I'm sorry, conflict in the Middle East—and European countries were very concerned about Ukraine. But other than that, those two conflicts were less of a focus relative to the concerns about tensions among some of the biggest economies. So those were things that were quite interesting.  

Steve Odland: Did you hear anything at all about—you mentioned that the tension between China and the West. But anything about specifically about, potential nervousness about military issues with the South China Sea, Taiwan, and so forth. 

Dana Peterson:So we also asked CEOs more detailed questions about conflict-related geopolitical risks. Now their number one thing, again, was intensified global trade wars and then foreign cyber attacks. But number three was greater risk of conflict in Asia-Pacific. So 21% were very concerned about that. 

And again, most of that concern was in Asian economies. Certainly, Japan, ASEAN would be very much affected by any kind of conflict between, within Asia-Pacific. And, also, at least 18% said that they were concerned about intensification of tensions, particularly in the Taiwan Strait.  

Steve Odland: Did you see any other major differences between CEOs geographically?  

Dana Peterson: Yes, we did. So we asked another question about geopolitics where we said, what are the economy-related geopolitics that you're most concerned about? So number one, for most every economy, with the exception of the US, was higher energy prices. Only about a quarter of US CEOs are worried about energy prices. And, related to that, energy supply. But decoupling or de-risking from China, that was something that showed some geographical differences, especially economies in the ASEAN economies plus India. They were very concerned about de-risking from China, although China was not concerned about countries de-risking from them. 

And then when it came to national debt and deficits, and also debt and deficits in the countries that you operate in, US national debt and deficits were the most important to the US—like 50% of CEOs said that they were concerned about that. Almost no one else was really concerned about that, which makes sense. But it's relevant because of the size of the US bond market and how disruptions in trade and Treasurys related to the debt ceiling, or just the outsized nature of our debt, can have global reverberations in financial markets.  

But it was interesting in terms of national debt and deficits in the countries that you operate in, you did have a number of economies, especially tiny economies, saying that they were very worried about that. But I would say that, for the most part, there is general consistency in terms of the fears around geopolitics.  

Steve Odland:We're talking about the CEO outlook for 2025. We're going to take a short break and be right back.  

Welcome back to C-Suite Perspectives. I'm your host, Steve Odland from The Conference Board, and I'm joined today by Dana Peterson, the chief economist of The Conference Board. 

And Dana, we're talking about the annual C-Suite Outlook, which is a major survey which we fielded a few weeks ago. And it talks about people's outlook for 2025.  

Strategies for Growth and Innovation 

Steve Odland: Now you mentioned earlier that growth is top of mind for most CEOs. That'sreally not surprising here, coming off of a period over the past few years where, honestly, it's been inflation-driven. And so you see top-line growth, it's inflation-driven. Now that inflation is moderated, you're back to basically trying to drive basic volume growth, whatever industry you're in.  

What did we hear specifically?  

Dana Peterson:Yeah, so companies are trying to be inventive in terms of how they're going to produce faster growth and more revenues. 

So the number one thing that they're focused on globally is innovation. So that includes research and development, investing in people processes, and also tools. And certainly, that was a big priority in Asia, apart from Japan. So that includes China, India, ASEAN economies. Also in Europe, there's a huge focus on innovation, because Europe has lost its competitiveness, and it needs to figure out how to compete with the US and Europe. Also, Japan's very focused. And in the US, 35% of CEOs were looking at innovation as a way to produce growth.  

Other areas: Number two was introducing new products and services. So really getting under the hood of what their customers want and creating new things, new experiences, or new products. And then also third was investing in technology, including AI. And we're going to talk a little bit more about AI. And then number four was investing in human capital. which is really great because you're going to need skilled people and workers to accomplish any of these things above in terms of being innovative, or creating new products and services, or even investing in tech. 

It's interesting that cutting costs was pretty low.It's like in the middle of the list, with 21% of CEOs globally saying they're going to raise prices—I'm sorry, cut costs—but it really being a focus, especially in Europe, less so in Japan and the US. And then we talked about increasing prices, and only 13% globally say that we're going to increase prices, and that was mainly driven by Japan, where a quarter of CEOs plan to raise prices. 

But elsewhere, it was between 9 and 10 percent of CEOs saying they plan to increase prices, including in the US.  

Steve Odland:Yeah, so that's the top line. Now, part of what you talked about in terms of costs and, of course, prices, hit the bottom line, as well. Any other feedback from us on how CEOs intend to grow profits in '25? 

Dana Peterson: Well, those are all the things that, I think, were pretty key, but reducing headcount was last, dead last on the list. And that doesn't surprise me—again, given the demographic factors companies are faced with, shrinking workforces. But also because companies are looking to really retain talent and keep people who are good what they do, but also upscaling, retraining them, et cetera. 

And then it's also a plus for consumption and GDP overall in many economies. Because if people are working, they're more likely to spend. That'svery true for most economies, not so much for China, because it doesn't have this social safety net. But I think that that coming in dead last is constructive. It's positive for growth.  

Steve Odland: Yeah, this, whole notion about retaining talent, or job banking, or skills banking, has been really interesting to watch over the past few years.You've talked about this as a job-full period of time, and I think there's value being placed by the C-Suite on workers more than we've seen in a long, long time. 

And, so, when you talk cost cutting in the past, you typically heard about job cuts. That was almost first on the list. Now you don't, you just don't hear that. So that, this is a real different period of time than we've seen over the past 40 or 50 years.  

Dana Peterson: Absolutely. And it's this big structural change. 40 of the last 40 or 50 years, you had plenty of workers. you had tons of baby boomers, and then they had children, Gen X. But the following generations, individually, are smaller. And you have a number of people who are retiring at the same time.So the baby boomers, they're going to be done retiring in a few years. But right on the back of that, you're going to have Gen X. The oldest Gen X person is probably around 60. So, four or five years from now, you're going to see a big, increase in them retiring. 

So companies don't really have a choice here. So either you, if you can't find the workers, they're also turning to technology. And once again, this year, in terms of investments, innovation, digital transformation, technology, AI were on the list for companies to grow and innovate, andbasically make up for the lack of workers in some areas.  

Steve Odland: Well, you, said it earlier, I mean, 10,000 baby boomers retiring a day, that's—what is that? 3.6 million people a year. I mean, this is unseen, but this has been this whole, this big boom and this generation has impacted everything as they've gone. And this period of time is no different.  

Leadership and Talent Retention 

Steve Odland: This is the C-Suite Outlook, and we've been talking a lot about the CEO, but we did survey other members of the C-Suite, direct reports to the CEO. Did we see any differences between the responses from the CEO and the CEO's direct reports.  

Dana Peterson: Well, there was a big difference with respect to leadership. So we asked CEOs and all the other executives, what does it take to be a good leader? And what are CEOs and executives looking for in leaders to grow profits at the end of the day? 

So innovating thinking was number one for CEOs across the board. It was also pretty important for CFOs and CHROs but it wasn't the number one for other executives. So other executives were definitely looking for, change management skills. They were also looking for agility and resilience. 

so CMOs and COOs are looking for technology, data, and AI, analysis. And when we look at CHROs, They were also very focused on technology and data. So you definitely see this split where CEOs are looking for innovative thinking, meaning new ideas so that we can, provide, goods and services to new markets, whereas his or her reports are more focused on the tactical things like we need data, we need technology, we need someone to actually make these changes within our company. 

So I think that's interesting. And it suggests that, given the gap, that there's a lot for CEOs and the rest of the C-Suite to discuss, and make sure that there's kind of a marriage of these two principles so that they can move forward.  

Steve Odland: Yeah.  

AI Implementation and Challenges 

Steve Odland: And one of the other differences relates to AI. 

You mentioned AI earlier, and we should turn to that now. AI, I think CEOs are worried about having the talent and the skill sets to really take AI to the next level. I think the CEO's direct reports were actually closer to the implementation or the use of AI tools, actually feel better about it. So there was a little difference there, too.  

Dana Peterson: Absolutely. And AI crops up just about everywhere. Indeed, companies are looking to AI as the number one thing to improve their supply chains. They think AI is actually working. And indeed, the number one thing that companies said that AI has done for them is increase the productivity of the workforce. So that means that rather than—so I think that takes away some of the fear that AI is coming for your job. Oftentimes it's not, it's going to come and make you better. And they also feel that the AI has been beneficial for customer satisfaction.  

But as you mentioned, Steve, certainly when it comes to views on the greatest challenges regarding the implementation of AI, CEOs say it's lack of experience. Number one. So we have this tool. No one knows how to use it. But the rest of the executive team of the C-Suite doesn't think so. So CFOs think, data privacy and security concerns are number one. CMOs and chief operating officers are saying, well, it's the quality of the output, right? Garbage in, garbage out. CHROs are also very concerned about data privacy and security. And when you ask ESG folks, sustainability officers and chief legal officers are also very focused on data privacy. So basically, the CEO is focused on expertise. Everyone else is focused on the data and, is it safe? So I think those are pretty interesting differences that, again, there's a gap that needs to be overcome.  

Steve Odland: it's interesting, a year ago, two years ago, and when we asked about AI, it was, oh wow! Are we falling behind? Or what is it? Or how do you spell it? I mean, but it wasn't that long ago. 

And now you're talking, you're hearing about, what's the best way to implement it? Do we have the right skills in this area? So you really see a really quick maturation curve in terms of adoption and implementation of these new tools.  

Dana Peterson: Absolutely. And I think something that's also interesting is there was a great concern about employee resistance. Are the workers gonna go along with AI? And for the most part, CEOs are saying, no, we're not seeing much in the way of employee resistance. Only 9% said that same thing with CFOs, as well as ESG folks. Among CHROs, they have ?around 10%.  

So the highest percentage is actually 16.4% for chief marketing officers and chief communications officers. I think because this probably hits closer to home, where AI can replicate some of the things that they're doing. But AI can also enhance what you're doing. You can become more creative. AI can do kind of the boring things for you. But there isn't much employee resistance that executives are seeing. And I think that's a positive thing.  

Steve Odland: Any others, as we wrap up, any other big areas that you want to highlight? 

Dana Peterson: So I think the last big insight that we see from the report is around human capital. As I mentioned, attracting and retaining talent persistently year after year is like one of the top issues or internal concerns of businesses. And that did not change this year. Close to 49% of CEOs said that attracting and retaining talent was very important to them. And, also, enhancing people productivity. So it's interesting that AI is helping with the productivity aspects and also developing leadership capabilities and upskilling and reskilling. Those are also things that are a big focus, which we've already talked about, and those are things. So I think it's interesting that CEOs are aligned on these focuses, these areas, for the company relative to the other questions that we asked.  

And, just looking at how CHROs think about this, CHROs agree. Yes, attracting and retaining talent is the biggest issue. And they're also pretty much in line with CEOs in terms of, yes, we need to make sure our leadership's developed. We're reskilling, upskilling our talent. And also, they were very close to the CEO in terms of culture and well-being and also thinking about how AI is going to impact the employee. 

So it seems like CHROs and CEOs are very much aligned. So that's great news, and it shows how important human capital is in terms of companies growing and being and sustaining that growth.  

Conclusion and Final Thoughts 

Steve Odland: Well, that's great. Well, Dana Peterson, thanks for being with us today and sharing all of this new news regarding our 2025 C-Suite Outlook survey. 

For our listeners, if you want to explore any more of these topics, please log on to our website at tcb.org and you can go deeper into all of our research in each of these areas. Dana, thanks for being with us.  

Dana Peterson: Thanks, Steve. Always great to be here.  

Steve Odland: Thanks to all of you for listening in to C-Suite Perspectives. 

I'm Steve Odland, and this series has been brought to you by The Conference Board.