Businesses in Bermuda, and globally, must reinvent themselves if they are to survive and thrive, an island-based business leader has said.

Arthur Wightman, PwC Bermuda leader, said: “Despite rising optimism about the global economy, CEOs are actually less optimistic than last year about their own revenue prospects.

“Moreover, they are acutely aware of the need to transform their business to survive.

“If organisations globally, and here in Bermuda, are to thrive over the short and long-term and deliver sustained value, they must accelerate the pace of reinvention.”

Mr Wightman was speaking as the 27th annual PwC Global CEO Survey was released on Monday at the World Economic Forum in Davos, Switzerland.

The survey showed that the percentage of CEOs who believe global economic growth will improve over the next 12 months increased from 18 per cent to 38 per cent.

CEO expectations of economic decline have also tumbled from a record high in last year’s survey (73 per cent) to 45 per cent, as perceived exposure to inflation and macroeconomic volatility fell by 16 percentage points (to 24 per cent) and seven percentage points (to 24 per cent) respectively.

Despite ongoing conflicts, the proportion of CEOs who felt their company is highly or extremely exposed to geopolitical conflict risk fell seven percentage points to 18 per cent.

CEOs in most regions of the world are also more likely to be optimistic about domestic economic prospects than pessimistic.

However, CEOs in North America and Western Europe buck the trend – in Western Europe, 32 per cent expect their domestic economies to improve, 48 per cent decline; North America, 31 per cent and 52 per cent, respectively.

CEOs are more likely to plan to increase than decrease their headcount in the next 12 months, with 39 per cent reporting that they expect to increase their headcount by five per cent or more.

However, while the trajectory is positive, the survey revealed that confidence is fragile as mega trends including technological disruption - exemplified by generative artificial intelligence — and the climate transition converge.

Forty-five per cent of CEOs say they do not believe their current business will be viable in a decade if it continues on its current path, up from 39 per cent in 2023.

The survey shows smaller companies are at greater risk: 56 per cent of CEOs leading businesses generating less than $100 million in annual revenue believe their businesses will only be viable for 10 years or less if it continues running on its current path. This falls to 27 per cent for those making $25 billion or more in revenue annually.

Reflecting uncertainty about how they will manage mega trends, the survey said, CEOs are somewhat less confident than the previous year in their own company’s prospects for revenue growth over the next 12 months – down from 42 per cent to 37 per cent.

The report said CEOs overwhelmingly see generative AI as a catalyst for reinvention that will power efficiency, innovation, and transformational change with 70 per cent believing it will significantly change the way their company creates, delivers, and captures value in the next three years.

CEOs are also optimistic about the short-term impact.

Over the next 12 months, almost 58 per cent expect it to improve the quality of their products or services and almost 48 per cent say it will enhance their ability to build trust with stakeholders.

They also expect better outcomes for their business — 41 per cent expect it to positively impact revenue and 46 per cent expect it to positively impact profitability.

The technology, media and communications sector is most positive about the impact on profit at 54 per cent, while energy, utilities and resources are least optimistic at 36 per cent.

But while CEOs are increasingly looking to the transformative benefits of generative AI, the report said, the great majority say it will require workforce upskilling (69 per cent).

They have also expressed concern about an associated rise in cybersecurity risk (64 per cent), misinformation (52 per cent), legal liabilities and reputation risks (46 per cent), and bias towards specific groups of customers or employees (34 per cent) in their companies.

As CEOs establish priorities, many are seeing the climate transition as an industry disrupter containing distinct opportunities in addition to risks, the survey said.

Nearly one third expect climate change to shift the way they create, deliver, and capture value over the next three years — up from less than one quarter who said as much regarding the past five years.

Almost all (97 per cent) CEOs note they have taken steps to change how they create, deliver, and capture value in the past five years, and more than three quarters (76 per cent) have taken at least one action that had a large or very large impact on their company’s business model.

However, 64 per cent cite the regulatory environment as inhibiting their ability to reinvent their business model to at least a moderate extent, 55 per cent point to competing operational concerns, and 52 per cent point to a lack of skills in their company’s workforce.

A further obstacle is inefficiency.

CEOs perceive significant inefficiencies across a range of their companies’ routine activities — everything from decision-making meetings to e-mails — viewing roughly 40 per cent of the time spent on these tasks as inefficient.

A conservative PwC estimate of the cost of that inefficiency would be tantamount to a self-imposed $10 trillion tax on productivity, the organisation said.

PwC surveyed 4,702 CEOs across 105 countries and territories from October 2 through November 10 2023.