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SYDNEY, AUSTRALIA – 8 OCTOBER 26
Concern about geopolitical tensions among Australian CEOs has fallen sharply in recent months, despite continuing conflict in the Middle East, trade uncertainty and economic and political instability, according to the latest EY-Parthenon CEO Outlook Survey.
Just 33 per cent of the 60 Australian business leaders surveyed identified geopolitical tensions, instability and conflicts as one of the most significant pressures facing their organisation over the next 12 months, down from 60 per cent in May. Regulatory and policy uncertainty are now the leading concern, cited by 42 per cent, followed by macroeconomic volatility at 40 per cent and talent shortages or workforce capability gaps at 37 per cent.
EY-Parthenon Oceania Leader Shannon Cotter said the decline in concern about geopolitical tensions did not mean the risks had disappeared, but suggested CEOs were giving greater weight to pressures closer to their immediate operations.
“Geopolitical uncertainty remains part of the operating environment, but business leaders are concentrating more heavily on the issues they can address directly. Regulatory settings, economic volatility and workforce capability are becoming more immediate considerations as leaders decide where to invest and how to position their businesses for growth,” she said.
The survey also suggests Australian organisations are gaining greater visibility over their AI investments, with 58 per cent of CEOs saying they can confidently assess the return on that investment, but many are yet to see it translate into broader business value. Only 37 per cent rank AI-enabled tools among the leading contributors to productivity gains over the past 12 months, compared with 50 per cent globally.
Cotter said the focus on AI was shifting as businesses moved beyond initial investment and pilots to identify where the technology could deliver measurable value.
“That means applying AI where it can support growth, improve customer outcomes or enable new ways of working. CEOs need to define the business problem, establish how returns will be measured and determine which applications merit continued investment at scale,” she said.
“The survey found 42 per cent of Australian CEOs remain unable to assess the return on their AI investments with confidence. Lacking oversight of AI impact makes it difficult to distinguish promising applications from those that are unlikely to deliver meaningful value. Businesses need clear measures of success so they can make informed decisions about where to continue investing, what to scale and when to change course.”
Skills shortages are also emerging as a significant constraint, with 72 per cent of Australian CEOs expecting access to skills to become a greater barrier to future growth than access to capital over the next three years. Despite this, only 18 per cent say their organisation is using productivity gains to fund workforce reskilling and capability building.
“While 67 per cent of CEOS believe their organisation can achieve their long-term growth ambitions with a smaller workforce, 70 per cent expect AI to have a greater impact on roles, skills and how work is organised than on workforce size,” Cotter said.
“The workforce impact of AI will extend well beyond changes in employee numbers. Technology investment must be matched by investment in people so employees can use AI effectively and organisations can redesign roles and ways of working. Without those capabilities, businesses risk applying AI only to existing processes rather than using it to create new value.”
The survey also points to a shift in how CEOs are approaching transactions and operational resilience. The proportion expecting to pursue divestments rose from 33 per cent in May to 62 per cent in September, while planned mergers and acquisitions activity fell from 65 per cent to 47 per cent. Separately, 75 per cent agree that companies will need to prioritise supply-chain resilience over efficiency.
“These findings suggest that Australian CEOs are not stepping away from transactions, rather they are becoming more deliberate about what they own and where they deploy capital. The next phase of the market may be driven as much by portfolio reshaping and capital recycling as by acquisition-led expansion,” Cotter said.
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Hamish Goodall – Corporate Affairs Manager, Oceania
Phone: 0467 346 364
Email: Hamish.goodall@au.ey.com
