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The CEO Imperative series
The latest signals from CEOs point to a meaningful shift in leadership posture. The conflict in the Middle East has propelled geopolitical risk even higher on the corporate agenda, but respondents are not retrenching as in previous crisis periods. Instead, CEOs' 2026 priorities now center on tightening execution, sharpening capital allocation and reinforcing resilience while continuing to invest in longer-term strategic ambitions.
That distinction matters. In previous shocks, many companies responded by pausing, preserving and waiting for visibility to improve. Today, CEOs increasingly recognize that instability is not episodic – it is now a standard condition of business.
CEOs are no longer treating geopolitics as a distinct and distant macro-overlay. It is not simply a higher-ranking risk; it is a multiplier of others. CEOs increasingly see geopolitics as the catalyst for pressures spanning supply chains, costs, cyber exposure and regulation, forcing political risk into the core of strategy, operating models and investment decisions, especially access to strategic technologies.
For CEOs, the right response is to be adaptive rather than reactive.
This is a more experienced response to volatility. CEOs appear to have absorbed the lesson of the past decade, which is that disruption is rarely brief, isolated or neatly sequenced.
In this edition:
Chapter 1
As geopolitical tensions intensify, CEOs are shifting from short‑term reactions toward structural change – strengthening resilience while investing selectively.
With CEOs being surveyed through mid-March and April, it is no surprise that geopolitical tensions, instability and conflict have rebounded as the top risk for business. More than half of CEOs (56%) now cite this as the key near-term risk, compared to just over one-quarter (28%) in September 2025, when technology disruption and AI, combined with access to talent, were top of mind for the C-suite.
How EY-Parthenon can help
The Geostrategic Business Group can help translate geopolitical insights into business strategy to help manage political risk. Find out how.
Read moreHowever, the full impact of the conflict in the Middle East is uncertain, particularly the economic disruption. And there are broader geopolitical uncertainties as well. As the latest International Monetary Fund (IMF) World Economic Outlook notes, “Downside risks dominate the outlook. A longer or broader conflict, worsening geopolitical fragmentation, a reassessment of expectations surrounding artificial‑intelligence‑driven productivity, or renewed trade tensions could significantly weaken growth and destabilize financial markets¹.”
CEOs acknowledge these risks. A plurality (46%) says their business would be exposed to significant headwinds if energy price shocks are sustained, with 42% also saying they would struggle to absorb prolonged and significant disruptions across their ecosystem.
The other issue that is gaining headlines and C-suite attention is the increasing concern about the advances in AI and its potential for significant disruption to existing cyber defenses. As noted in the EY study of 500 security professionals on AI in cybersecurity (via EY.com US), this is a rapidly evolving and multifaceted conundrum for business leaders.
With so much yet unclear, CEOs are taking a measured and disciplined approach in the face of these interconnected external disruptions. They are strengthening financial resilience, but they are also investing in strategic partnerships, selective mergers and acquisitions (M&A), digital and AI capability, workforce productivity and supply chain redesign.
In a world defined by nonlinear, accelerated, volatile and interconnected risks – what the EY organization calls the “NAVI world” – leaders need both immediate resilience and longer-term reinvention. Against this backdrop, CEOs appear to be prioritizing resilience not as a defensive measure, but as a foundation for growth. Their responses suggest a continued move away from short-term reactions toward structural adjustments in how their organizations operate and compete.
Rising global trade tensions will also accelerate existing government plans to adopt sovereign industrial policies, with increased strategic state intervention aimed at strengthening industrial security. Successive global crises and increasing geopolitical tensions have exposed vulnerabilities in supply chains, prompting governments across the world to prioritize critical products in key industries.
Chapter 2
CEOs face pressure to demonstrate enterprise‑level financial returns from AI quickly enough to sustain investment in a tighter cost environment.
Globalization as we knew it is cracking under the weight of trade wars, tariffs and geopolitical shocks, and CEOs are no longer waiting for it to stabilize. The fragility of formerly vaunted models of concentrated globally dependent supply chains has been exposed. The response is clear: For many companies, this means localizing or regionalizing aspects of production and sourcing — not as a retreat but as a pragmatic response to changing pressures.
The goal is to rewire supply chains for speed, resilience and the ability to serve customers more efficiently, with lower costs and fewer policy restraints. At the same time, it’s not a one-size-fits-all solution: Some businesses will find full localization impractical, cost-prohibitive or unnecessary, choosing instead to adopt a hybrid approach that balances global scale with regional agility.
Nevertheless, nearly 75% of CEOs are either in the process of localizing or have localized some part of their production within the country of sale. Just over half are in the process or have reorganized supply chains to serve a particular regional bloc.
CEOs are allocating capital across cost transformation, quality uplift, business model reinvention and incremental efficiency. That spread matters because it suggests AI is being treated less as a discrete technology program and more as a structural lever across the enterprise.
AI is moving quickly, and companies are under pressure to keep up without overspending. It is driving competition, lifting expectations for personalization and demanding investment before the benefits are proven, while also increasing data privacy risks.
CEOs are not idealizing AI. They are becoming more operationally serious about it. In other words, the imperative is shifting from whether to adopt AI to how and where to scale it to create the biggest impact and financial return.
Respondents say AI is already delivering measurable impact across operations, supply chains, product or service innovation, customer experience, strategy and risk management. What matters is that these are not only back-office or isolated use cases. They span revenue, operations and decision-making. This also means that AI programs that cannot demonstrate measurable financial impact will increasingly struggle to compete for investment internally.
CEOs are also signaling that AI impact on enterprise value creation remains uneven. This suggests the new dividing line is not access to technology or enthusiasm for AI. It is the harder work of measuring the impact of AI across the organization and aligning it with financial performance.
So, CEOs are not being sanguine about the external geopolitical, macroeconomic and trade risks they face. It may be more of a shift of focus. Compared with the May 2025 survey, CEOs see the major risks to growth, such as technology disruptions and AI integration or talent management and innovation, as areas more under their control.
The global EY organization’s Megatrends article highlights this new environment — what we call a NAVI world. It is a business landscape characterized by nonlinear, accelerated, volatile and interconnected forces. This means that change does not follow predictable patterns but unfolds at unprecedented speed, arrives in unpredictable surges and bridges systems in ways that demand entirely new ways of operating, thinking and leading.
Technology, labor availability, and innovation are deeply interconnected as companies seek to accelerate growth. Advances in technology create new opportunities for efficiency and expansion, but they require skilled labor to harness their full potential. At the same time, a diverse and adaptable workforce brings the creativity needed to drive innovation, while innovation itself shapes how technology is applied to solve business challenges. When these three elements align, organizations can unlock new business models, scale faster and remain competitive. Together, they form a cycle in which progress in one area fuels momentum in the others.
The first step in any transformation is deciding exactly what assets to transform, taking bold decisions on what to keep and what to let go. The biggest sign in the survey to support this proactive mindset from CEOs are their intentions on transforming their portfolios.
Only 11% of respondents say AI impact is linked to financial reporting and reviewed regularly by senior management. That minority group represents a more mature stage of AI management, where outcomes are connected to finance, and accountability sits at the top of the house, with AI treated as part of enterprise performance rather than adjacent to it.
What makes this group especially interesting is the balance in its profile. Our EY-Parthenon CEO Outlook survey shows that these CEOs are more likely to expect stronger revenue growth, more likely to report recent growth, yet more outwardly alert to macroeconomic, geopolitical and cyber risks. That is the pattern of leaders who have linked ambition to discipline. They are neither complacent nor risk-averse. They are more confident in internal capability because they have created tighter lines between investment, governance and results.
This is where the narrative should move beyond adoption and into enterprise design. It should start to become more apparent that AI-led innovation produces durable value only when it is embedded in workflows, linked to decisions, supported by trusted data and integrated into the management system. That is the central argument of how the productivity reset will redefine value, which contends that real productivity gains require leaders to rethink data, skills and operating models rather than merely deploy new tools.
Many leaders underestimate the speed at which industrial AI and automation are set to change cost bases and competitive dynamics in heavy industries like steel.
How EY-Parthenon can help
EY-Parthenon is a global strategy consulting firm helping CEOs, boards and investors drive growth, transformation and long-term value creation. Learn more.
Read moreThat pattern sits well with how AI helps superfluid enterprises reduce friction, improve agility and embed AI more deeply across the enterprise through hybrid governance and redesigned operating models.
Respondents say current AI regulatory frameworks create a mixed experience. Only a fifth (19%) of CEOs are truly satisfied with the current AI regulatory frameworks – with surprisingly little variation across regions despite different approaches to AI regulatory frameworks. Many emphasize fragmentation, complexity and the risk that compliance burdens outpace business clarity.
Regulation has become too complex. Clarity and global alignment are what matter. Where possible, regulators should align standards across borders or at least make them compatible between regimes. That will allow companies to scale AI solutions responsibly without duplicating efforts market by market.
The sheer pace of developments in AI and the speed at which regulators need to adapt is another concern of CEOs.
Regulation needs to keep pace with AI without becoming restrictive or quickly outdated. That means keeping rules flexible and grounded in how the technology is actually used. Close engagement with industry will be essential to ensure policies are workable in practice.
CEOs are not rejecting regulation in principle. They are signaling that the quality of regulation, and the ability to operate across jurisdictions, will increasingly shape who can scale AI with confidence. This makes trust, governance and cyber resilience strategic capabilities rather than support functions. This interpretation aligns with how reframing trust as a strategic asset tied to resilience, adoption and enterprise value allows firms to navigate change and unlock growth. CEOs need to also consider the current attitudes of wider public as they navigate regulatory complexities. The 2026 AI Sentiment Study shows that three-quarters of people are looking for stronger regulations on how companies can use AI.
CEOs are also clear that AI transformation is inseparable from workforce transformation. Respondents say AI will reshape workforce strategy through role redesign; larger hiring needs in AI, data and digital; and more significant reskilling and upskilling efforts. But when they identify what is holding value back, they point to limited skills, leadership capability gaps, weak learning infrastructure and cultural resistance.
Managing a large-scale reskilling effort at an established industrial company like ours is more of a cultural challenge than a technical one. To move from a traditional manufacturing mindset to an AI-augmented one, leadership must focus on consistently communicating that AI is a tool for the craftsman, not a replacement for the craft.
This suggests that the real AI bottleneck is organizational absorption. CEOs may be ready to invest, but value will depend on redesigning work, continuously renewing skills and turning experimentation into scaled behavior change. This aligns with the findings of why shared intelligence will redefine talent and EY Work Reimagined Survey, both of which highlight the importance of aligning talent, work and technology to unlock value.
This reskilling of existing employees who have deep knowledge of their industries is becoming a clear imperative. But it requires time and investment.
Employees need time and support to learn. That means making training part of the working day, not an add-on.
Chapter 3
M&A is no longer an opportunistic expansion. CEOs are using deals to build technology advantage, reduce complexity and reconfigure portfolios around long‑term growth and capability leadership.
Deals are no longer optional to transformation – they are a core mechanism. CEOs are using acquisitions, divestments and partnerships to reshape the whole enterprise, not just to manage the portfolio.
How EY-Parthenon can help
Transactions and Corporate Finance by EY-Parthenon teams can help companies transform their business with confidence.
Read moreThat explains why deal appetite remains so elevated even in a more volatile setting. This is not to say that all these ambitions will result in deals in 2026. External pressures such as developing geopolitics and conflicts may cause a pause in the deal market. But the intention is certainly at the forefront of CEO thinking.
When the operating environment is unstable and the pace of technological change is high, building everything organically can be too slow, too uncertain or too capital-intensive. Selective M&A becomes a way to accelerate access to technology, talent, products, markets or operating capabilities that would otherwise take years to build. Divestments can release capital, reduce complexity and sharpen strategic focus.
And CEOs are looking at their portfolios through twin lenses of technology and long-term opportunities. Respondents say decisions are being shaped by strategic fit with long-term growth priorities, margin quality and returns, the ability to enhance technology or AI capabilities, capital intensity and the management burden of complexity. This is the language of disciplined portfolio design, rather than opportunistic expansion.
In our industry, technological advantage is the only true advantage. When we evaluate deals, the ability to enhance technology or AI is not just about adding new products. Instead, it is about accelerating our transition into a software-defined, top-tier defense organization.
Those CEOs combining AI investments and financial performance with regular board-level oversight are more likely to prioritize technology and AI capability building, more likely to emphasize long-term strategic fit, and more likely to use joint ventures and alliances. That combination suggests a more sophisticated approach to portfolio optimization. They are not only asking what to own. They are also asking where partnering offers a faster, more flexible and lower-risk route to capability.
The EY Firepower report: life sciences dealmaking – trends in 2026 argues that companies need to move faster on the deals that matter most in order to compete in a more demanding environment. In a slower-growth, more volatile market, M&A becomes more strategic precisely because it is more tightly linked to future capability, as companies look to accelerate faster in areas of faster growth.
CEOs are using the portfolio to build technological strength, reduce organizational drag, improve resilience and create conditions for more durable growth.
The CEO agenda is currently defined by disciplined ambition. Despite rising external risks – most notably geopolitics – CEOs are not retreating from long-term priorities. They are investing selectively and building resilience to accelerate transformation. AI remains central to their ambitions, with the focus shifting from utilization to value creation. Talent is being revisited as combining technology and institutional knowledge becomes critical. Portfolios are being reshaped to address capability gaps and reduce complexity. The leaders who stand out are using discipline to sustain ambition – not scale it back.
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