As we step into 2025, Irish CEOs find themselves at the crossroads of opportunity and uncertainty. The global landscape is shifting at an unprecedented rate, with geopolitical tensions casting long shadows over the business horizon. The rise in geopolitical conflicts has become a pressing concern, with 88% of Irish CEOs feeling the weight of these global tensions — up 6% year-on-year. This increase underscores the unpredictable nature of international relations and their far-reaching impacts on business operations.

Macroeconomic volatility continues to be a dominant threat, with 93% of Irish CEOs feeling exposed. This concern is echoed globally (94%), reflecting widespread apprehension about economic stability. While inflation worries have eased slightly for Irish CEOs, down to 89% from 95% last year, the spectre of technological disruption looms large, with 87% of Irish CEOs wary of the rapid pace of change.

The talent landscape is also evolving, with 91% of Irish CEOs and 86% of global CEOs expressing concern over the availability of workers with key skills. This talent crunch is a critical challenge as businesses strive to innovate and grow. Additionally, climate change and social inequality are climbing the list of priorities, with 76% and 62% of Irish CEOs respectively acknowledging their impact. Notably, social inequality has jumped 15 percentage points year-on-year, up from the 2024 figure of 47%.

Despite these challenges, there is a silver lining. Irish CEOs remain optimistic about the country’s economic prospects. 74% expect Ireland’s economic growth to improve in the next 12 months, a significant leap from last year’s 50%. This optimism extends to their own companies, with 93% expressing confidence about their company’s prospects for revenue growth in the year ahead. The intention to increase headcount further reflects this positive outlook, with 45% planning to expand their workforce — albeit down 8% since 2024 — compared to just 12% anticipating reductions.

These trends paint a complex picture. Irish CEOs are navigating a landscape where optimism and caution coexist. The rising geopolitical tensions and macroeconomic volatility demand strategic foresight and resilience. As they steer their companies through these turbulent times, the ability to balance growth ambitions with risk management will be crucial.

Many business leaders appreciate the urgent need to reinvent their business models. In Ireland, 29% of CEOs believe their company will not be viable in ten years time without change, compared to 42% globally. Irish CEOs are actively pursuing reinvention, focusing on product and service innovation and targeting new customer groups, both at 89%. The majority are also tackling more challenging actions like collaborating to create new ecosystems (85%), exploring new market routes (79%) and adopting new pricing models (78%), mirroring global trends.

Globally, there is a clear link between the number of reinvention actions taken and higher profit margins. Companies taking more reinvention steps also reported greater gains from AI over the past year. In Ireland, 32% of CEOs have ventured into at least one new sector in the last five years, close to the global average of 38%. CEOs around the world are expanding into sectors like business services (with new competitors coming from technology, telecommunications and media), health services (with new competitors coming from insurance, technology and telecoms), and consumer markets (with new competitors coming from pharmaceuticals, banking and media). Notably, 15% of global CEOs are now competing in the technology sector, which is unsurprising given the rise of AI and GenAI-powered technologies.

Dynamic resource reallocation is crucial for this type of reinvention. Building a new business quickly requires shifting resources from lower-priority projects. Yet, many companies struggle to achieve the required agility. About half of Irish and global CEOs reallocate 10% or less of their resources annually, and almost three-quarters reallocate less than 20%. On the talent side, the global data shows that companies with high human resource reallocation (30-40%) see profit margins more than two percentage points higher than those with low reallocation (less than 10%). This shows that reinvention and dynamic resource reallocation go hand-in-hand.

Just two years after GenAI appeared on the radar of most executives, we are seeing a surge in AI-related innovation activity as companies worldwide plan to adopt it at scale. However, business leaders have experienced mixed outcomes in the last year. The focus has been on realising efficiencies in operations rather than on revenue generation or AI as a catalyst for more fundamental business model reinvention. In the last 12 months, 44% reported improved employee time efficiency, while just 31% reported increased revenue and 24% reported higher profitability.

While these outcomes may not match the most bullish expectations, optimism remains strong. Half of Irish CEOs (50%) expect GenAI to boost profitability in the next 12 months, 26% higher than what they reported achieving in the last year (Global: 49%, and 15% higher than last year’s achievements). While adoption at scale remains modest, our data indicates that AI is not being used to replace the workforce: only 10% of Irish CEOs and 13% globally have reduced headcount due to GenAI investments, while 87% in Ireland and 82% globally have increased or maintained it.

Looking ahead, most Irish CEOs will prioritise integrating AI into technology platforms (94%, 93% globally) and business processes and workflows (94%, 93% globally) over the next three years. A similarly high percentage plan to use AI for new products and services (84%, 86% globally) or reshaping core business strategies (85%, both in Ireland and globally). For most companies, this order of priorities makes sense. More surprising is that only a third of Irish and global CEOs plan to integrate AI into their workforce and skills strategy “to a large or very large extent”. This could be a misstep, as realising AI’s potential hinges on employees knowing how to use AI tools effectively and understanding potential pitfalls.

As highlighted above, half of Irish CEOs are optimistic about the potential of AI to enhance their company’s profitability in the coming year. While 29% express a high level of trust in integrating AI into key processes — slightly below the global average of 33% — there is a significant opportunity for growth. Our data shows that global CEOs who have embraced AI have reported notable benefits over the past year and expect even more positive outcomes in the future. These CEOs are proactively integrating AI into technology platforms, business processes and workflows, a shared priority for 94% of Irish CEOs.

The differing levels of CEO trust in AI mirror the general public’s feelings. For example, PwC’s global Voice of the Consumer Survey 2024, which gathered insights from 20,000 consumers worldwide, revealed a similarly diverse range of opinions on AI. For CEOs who are beginning their AI journey, there is an opportunity to engage with AI-related challenges and turn them into potential opportunities.

Building trust in AI — both internally and externally — is essential to unlocking its full potential. Compliance with the EU AI Act and other AI-focused regulations will provide a supportive framework for safe and responsible AI use. Given that GenAI in particular is still in its early stages, maintaining a balanced perspective is key. By engaging constructively with AI’s challenges and opportunities, and addressing the trust gap through Responsible AI, CEOs can ensure their companies are well-positioned to thrive in the AI-driven future.

Climate action is more than a strategic business decision; it’s a moral and social imperative essential for the longevity of our planet. As stewards of their organisations, CEOs have a responsibility to lead the charge in adopting sustainable practices. However, they must also justify these climate investments to their boards, investors and stakeholders, ensuring that the long-term benefits align with the company’s financial goals.

With 76% of Irish CEOs acknowledging exposure to climate change — up 2% from last year and slightly above the global average of 70% — it is not surprising that four in ten Irish CEOs have their personal incentive compensation tied to sustainability metrics, 16% lower than their global peers. Furthermore, 30% of Irish CEOs (25% globally) have accepted lower returns for climate-friendly investments, such as transitioning to energy-efficient operations, developing greener products and services, and implementing emission-reducing technologies, compared to other investments. Overall, the data suggests that the more CEO compensation is linked to sustainability, the more revenue is likely to come from climate-friendly investments, demonstrating that it’s not a zero-sum game.

When asked about the financial impact of their climate-friendly investments over the past five years: 31% of Irish CEOs reported increased revenue, slightly below the global average of 33%. Additionally, 22% of Irish CEOs received increased government incentives, compared to 23% globally. About 10% of Irish CEOs noted cost reductions from climate-friendly investments, slightly below the global rate of 18%. On the other hand, 51% noted a cost increase as a result of climate-friendly investments in the last five years (Global: 36%). Globally, climate investments are linked to higher profit margins, consistent with last year’s findings, which showed a connection between various climate actions and stronger financial performance.

Despite the mostly positive financial impacts of climate-friendly investments, several inhibitors challenge companies’ ability to initiate these initiatives. In Ireland, 75% of CEOs cite regulatory complexity as a significant barrier (global: 68%). Additionally, 71% of Irish CEOs report a lack of demand from external stakeholders, compared to 66% globally, while lower returns for climate-friendly investments are a concern for 57% of Irish CEOs (global: 64%). Financial constraints also play a role for 51% of Irish CEOs (global: 54%), and a lack of buy-in from management or the board is noted by 34% (global: 45%). These challenges highlight the need for continued advocacy, strategic planning and stakeholder engagement to overcome barriers and realise the benefits of climate-friendly investments.