KPMG 2025 Global CEO Outlook

In this complex environment, CEOs acknowledge they must rethink their organizations’ roles and capabilities as well as adapting their growth strategies. Greater agility and faster decision-making (26 percent globally, 40 percent in Luxembourg), transparency in communication (24 percent globally, 55 percent in Luxembourg), and the ability to identify, prioritize and manage risks (23 percent globally, 40 percent in Luxembourg) are seen as the top leadership capabilities needed today.

In terms of risks, economic uncertainty is seen as the top threat by CEOs — and risk resilience remains an indispensable attribute. This applies across multiple domains including technology (cybersecurity, data protection, ethical use of AI), talent (skills shortages and a pressing upskilling need, especially around AI) and ESG (navigating an increasingly politicized and polarized world, meeting the rising regulatory and reporting requirements relating to sustainability).

It’s a complex picture that is both challenging and energizing CEOs as they pursue growth, organizational prosperity and sustainable practices that will safeguard the business for the long term. The pressures are considerable — but so are the anticipated rewards for those organizations that can grasp the opportunities while tightly managing the risks.

Now in its eleventh edition, the KPMG CEO Outlook offers a unique window into the perspectives of business leaders in Luxembourg and around the world. Drawing on responses from more than 1,300 CEOs across a wide array of industries and regions - including Luxembourg - the report highlights the trends, priorities, and strategies shaping today’s global business landscape. Here are the key insights:

Amidst ongoing geopolitical volatility, CEOs’ confidence in the global economy has fallen to its lowest level (68 percent) in five years, down from 72 percent a year ago. Despite this dip, they remain positive about the prospects for their own organizations with 61 percent forecasting earnings increases of 2.5 percent or more over the next three years.

To mitigate structural risks and ensure competitiveness, CEOs are signaling intent through investment in people, AI, M&A and organizational design. Ninety-two percent of leaders plan to increase headcount, while 69 percent are allocating up to a fifth of their budget on AI. Additionally, 89 percent anticipate M&A with moderate to significant impact over the next three years. Resilience and targeted investment in these areas are seen as the best strategies for addressing the structural risks and shifting dynamics faced by business leaders globally.

The top pressures influencing investment decisions are being mitigated in several ways, including:

• Cybersecurity and digital risk resilience (39 percent)
• Regulatory compliance and reporting (36 percent)
• AI integration into operations and workflow (34 percent)

CEOs are also acknowledging the increasing challenges of their roles — 59 percent believe that expectations and complexity have evolved significantly in the last five years with nearly a quarter (23 percent) singling out AI and broader digital literacy as essential leadership skills. In addition, 80 percent of leaders say they feel under more pressure to ensure the long-term prosperity of the business. However, this is much the same as a year ago — despite the turbulence, business leaders feel well-equipped to navigate what has become a persistently disruptive business environment. Change and challenge have become the ‘new normal’ and leaders are rising to the occasion.

To navigate a shifting economic landscape, leaders continue to double down on AI and technological innovation. Over seven in ten CEOs (71 percent) say that AI is a top investment priority, a significant increase from a year ago (64 percent), and over two-thirds (69 percent) are allocating 10-20 percent of their budget on AI spending. At the same time, there is growing confidence about ‘time-to-value’, with 67 percent anticipating return on investment in one-to-three years. This marks a notable shift from a year ago, when the majority (63 percent) did not expect to achieve ROI until three to five years.

As AI continues to transform the corporate landscape, Luxembourg’s leaders are moving decisively to embrace its potential. Even amid ongoing economic uncertainty, a majority of CEOs see AI as a top investment priority and are planning significant budget allocations over the coming year. Confidence in their organizations’ ability to adopt AI, adapt workflows, and equip the workforce remains high, while boards are increasingly viewed as key enablers of technology-driven growth. At the same time, leaders are actively addressing the challenges that come with AI adoption, from workforce training to transparent communication about its impact on roles.

Overall, confidence around AI is strong, with 74 percent of leaders believing that their organization can keep pace with the rapid development of AI and its effects on adoption, operations or workflow. There is also high confidence (89 percent) that boards are equipped to navigate the adoption of advanced technologies to drive business growth.

CEOs see experimentation as a critical step in scaling AI adoption: 84 percent believe that employee experimentation, at all levels, is key and that everyone should be encouraged to take part. Leaders also recognize that transparency and openness about AI is essential. Nearly half (46 percent) say they are communicating openly with employees about the potential impact of AI on roles.

In a sign of how quickly AI is evolving, the majority of CEOs (57 percent) expect agentic AI to have a significant impact on their organization alongside generative AI.

But it is this very speed of change that also creates challenges. Although three-quarters (76 percent) of leaders say that their organization is ready for the integration of AI through robust governance, they also recognize a number of key issues to navigate, including:

• Ethical challenges (59 percent)
• Data readiness (52 percent)
• Lack of regulation (50 percent)

Regulation is a critical question on the minds of CEOs. Sixty—nine percent say the pace of regulation — its ability to keep up with the technology itself — will be a barrier to success.

Recognizing that the workforce is central to utilizing and making productivity gains through AI, CEOs are committed to people-led deployment of new technologies. Business leaders are reshaping workforces at speed: retraining, hiring and redesigning roles to embed AI.

A strong majority of CEOs (77 percent) agree that workforce AI readiness and upskilling will impact their organization’s prosperity over the next three years. However, with a limited AI-related talent pool, it is also a major competitive issue: 70 percent of leaders agree that competition for AI talent could constrain their organization’s success.

In response, boardrooms are taking active steps. Seventy-nine percent of CEOs say that AI has already made them rethink how they train and develop employees. Over seven in ten (71 percent) are focusing on retaining and retraining high-potential talent, while 61 percent are actively hiring new talent with AI and broader technology skills.

Engaging employees in this transition is crucial, but CEOs acknowledge that this will require focus and support. Sixty-three percent are concerned about the possible impact of AI on company culture. Additionally, a third (33 percent) recognize that some employees’ unwillingness to adopt new technologies and adapt to changes poses a challenge.

However, AI is not the only concern for business leaders regarding their workforce. Labor market shifts and demographic changes — particularly an ageing workforce — are seen by 88 percent of leaders as having a moderate to high impact on recruitment, retention and culture. Nearly a third (30 percent) of CEOs highlight growing generational gaps on key future skills, while a quarter (24 percent) are worried about the number of employees retiring, coupled with a lack of skilled workers to replace them. Managing the multi-generational workplace has become a new strategic item on the boardroom agenda.