Board Focus: Risky Business

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We all know the story in the corporate world today: Tariffs upending expenditure plans. Geopolitical quagmires cropping up overnight. And large AI investments potentially becoming an enormous opportunity—or disaster. For CEOs and directors, there’s one word for all of this: risk.

In our first-ever survey on this topic, Risky Business, Korn Ferry asked 250 CEOs and board members what’s happening to their organizations’ risk profiles and how leaders are navigating it. What we found is eye-opening. To start, 63% of respondents said their organization’s overall risk exposure had risen in the past 12 months—and that they’re not expecting a slowdown in the coming months.

What’s more, confidence in managing risk is low—with only 11% of leaders overall saying they are “fully confident” in their capacity to do so. And the specific risks are keeping even more leaders up at night: Only 7% are “extremely confident” their organization can handle geopolitical risk, and just 9% are “highly confident” they can handle economic volatility—even if those events have become somewhat recurrent. "The low confidence figures are stunning,” says Jane Edison Stevenson, global vice chair of Korn Ferry’s Board and CEO Services practice.

To be sure, there’s nuance to the numbers, as there often is when surveying executives. Confidence levels spike up on some other issues, and vary by industry. “There has always been risk, and with risk comes opportunities,” says Dennis Carey, vice chairman of Korn Ferry. “Many times people look at risk as a four-letter word and don’t realize that it can be an opportunity to capitalize on change.” Still, experts say current events suggest that top leadership may need to rethink how they manage a level of risk that keeps rising. Below, we detail five key takeaways of our Risky Business survey.

No. 1: A Confidence Crisis Is Upon Us

Despite their experience and resources, only a small percentage of CEOs and board members feel their firms are really ready to take on today’s biggest threats—from economic swings to talent shortages. In addition to the confidence levels mentioned above, fewer than 10% feel “highly confident” about their firm’s addressing of AI and climate risks. Just 4% of CEOs are highly confident about their company’s management of talent and skills, despite mounting concern that workers need more training to work with AI. And looking toward the future, only 10% of leaders surveyed said they’re “extremely confident” in their leaders’ abilities to thrive over the next three years. “It’s definitely an anxious moment for leaders,” says Tierney Remick, vice chairman and co-leader of Korn Ferry's Board & CEO Services practice. “The complexity of leading today makes it difficult to prepare enough in advance and feel good about managing multiple scenarios.”

No. 2: A Growing (Industry) Gap

When it comes to industries, a sector-specific picture emerges in managing risk. Ask consumer-markets and manufacturing leaders and—no surprise here, thanks to tariffs—they’ll tell you organizational risk in their sectors rose 86% and 83%, respectively, over the past 12 months. But talk to a life-science leader, and they’ll put their overall risk increase at 44%. “Risk is very much sector dependent,” says Dominic Schofield, managing partner of Korn Ferry’s Board and CEO Services practice in London. “Some sectors are really struggling to grow and just trying to keep the show on the road. Others are battling for a higher share of the consumer wallet.”

No. 3: Will AI Bring a ROI?

Investments in AI are surging, at more than $200 billion annually. But most leaders don’t expect real results anytime soon; only 8% say they’re “extremely confident” they’ll see a meaningful return on investment within three years.

The survey also provides an interesting glimpse into the hot topic of how many jobs AI will replace. The results show a gap among leaders: 82% of respondents expect up to 20% of their workforce to be replaced by AI within the next three years, while 17% expect to lay off between 20% to 40%. The uncertainty complicates strategies in terms of where to invest and in what (or whom). “Leaders are thinking about the chessboard of talent as opposed to the next move and the move after that,” Remick says. “They’re having to figure out what the business implications of talent will be five years from now, and how to start to develop that talent today, or they’re out of the game.”

No. 4: Soft Skills Take a Back Seat

As organizations prioritize AI literacy and agility, softer skills such as emotional intelligence and the ability to drive engagement are no longer top priorities for leaders. Just 20% of respondents chose “driving engagement” as a top leadership skill, and only 38% say emotional intelligence is most important. That’s compared to 69% who cite AI/tech proficiency as the most critical leadership skill for the next 3 years. Experts say this could be a major mistake. “Now is not the time to neglect investment in your people and your leaders,” says Elise Schroeter, global head of organization and talent strategies for Korn Ferry’s Board and CEO Services practice. “Those are the people who will help you weather the storm and make it through.”

No. 5: Culture and Capital-Risk Roadblocks

Even when leaders know what to do, some hit walls internally. Cultural inertia (31% of respondents) and budget constraints (29%) are the biggest barriers to meaningful progress on risk mitigation. Of course, organizations that want to stay resilient must treat mindset—and funding—as mission critical. “Sometimes not taking the risk is the risk,” says Evelyn Orr, head of CEO and executive assessment, North America, for Korn Ferry. “Standing still isn’t an option when the world is changing around you.”

Find out more about how boards and leaders are handling today’s volatility by exploring our leadership-topics hub.

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