Averill said overlaying the challenges of the last two or three weeks added to the need to have a dual imperative.
“In the survey when people were questioned they didn’t see a climatic risk being as high as I’m sure they would now.
“That’s an example of where some of the longer term big issues like climate change have actually become really real in the short term because of the event and therefore the need for business to react and address the short term challenge that has been presented.”
But he said they also needed to think about it from a future sustainability and resilience of business perspective.
“An example would be people hadn’t really thought through the impact of the loss of power on other things like the provision of cell phone services.”
“You then talk about the rebuild - when you look at for example the Hawke’s Bay - it’s a major provider of pip fruit and other export products because of the climatic environment.
“So it’s going to be about - how do you come back and rebuild that infrastructure recognising the climatic risk?
The survey also showed a sharp drop in business confidence with 79 per cent of NZ CEOs believing the global economy would decline over the next year compared to 64 per cent believing it would improve in the prior year’s survey.
It found 76 per cent believed New Zealand’s economic growth would decline over the next 12 months compared to the 49 per cent who believed it would improve in 2022.
Averill said the change in confidence was a function of headwinds getting closer.
“Probably the big thing is the short-term inflation factor and how that has become real and very relevant for all of us as we navigate our own business strategy through the current environment.”
The survey found the majority of CEOs had already increased the price of their products and services or were considering doing so.
While nearly half (49 per cent) had already reduced operating costs and a further third were planning to do so.
Just 16 per cent had already laid off staff while 23 per cent said they were considering doing so. Only 13 per cent had put in place a hiring freeze although 27 per cent were thinking about doing it.
Not viable in 10 years
The research also found 27 per cent of CEOs believed their businesses would not be economically viable in less than 10 years.
This was lower than global research which found 39 per cent believed this and across the Asia Pacific region where it was 53 per cent.
Averill said that figure was not a surprise.
“It highlights the need for businesses to ensure that they have the transformation - technology, skills and the people that are going to be required to ensure their future success and if you don’t change or don’t change quick enough - that’s where that challenge is going to be.
“If we don’t change or transform and be agile and do it at the pace required of the current environment that’s the downside risk. And that risk is getting greater.”
Averill said avoiding that risk was about embracing technology and innovation as well as upskilling existing staff.
“It’s a combination of those two aspects.”
Still optimistic
Averill said despite the challenges there was still reason for optimism.
While the percentage of those confident about their organisation’s revenue growth shrunk from 53 per cent to 39 per cent he said that was still nearly 40 per cent.
”That highlights there still is an opportunity for many businesses across a number of sectors which does mean growth is available and investment is going to be required.
“When you also look back at the track record of CEOs - we have fared well on a relative basis compared to many other countries. We have shown a degree of resilience - that gives rise to why as a country we should have cautious optimism on a relative basis.”
