CEOs Identify AI as Top Business Risk, Surpassing Geopolitical Turmoil

For the first time, chief executive officers (CEOs) are identifying artificial intelligence (AI) as the paramount business risk, surpassing traditional concerns such as geopolitical turmoil, cyber intrusions, and financial instability. This significant shift in perception was revealed in a quarterly survey by The Conference Board, highlighting the profound impact AI is having on executive strategic thinking. The survey indicated that 60% of CEOs at Fortune 500 companies now rank AI as the leading risk to their industry, marking a seven-percentage-point increase from Q4 2025. This places AI risk one percentage point ahead of geopolitical instability and four percentage points ahead of cyber risks, underscoring its perceived immediacy and magnitude.

Despite this heightened awareness of risk, the survey also reported a surge in CEO confidence, reaching its highest level since Q1 2025. Concurrently, the share of CEOs planning to boost capital spending increased to 35% this quarter, up from 22% in the previous quarter. This dual trend suggests that while executives recognize AI's disruptive potential, they are also prepared to invest in harnessing its capabilities, signaling a restored optimism among leaders of large firms. Dana Peterson, Chief Economist at The Conference Board, noted that CEOs' expectations for their own industries have progressed from mild cautiousness to solid confidence.

The challenge for C-suite executives is two-fold: balancing the imperative to invest in AI to remain competitive against the risk of over-investment yielding insufficient returns. Federal Reserve Governor Lisa Cook articulated this caution, viewing AI's general adoption with a degree of apprehension despite its immense promise. She likened AI's emergence to Joseph Schumpeter's concept of "creative destruction," predicting it will lead to the most significant reorganization of work in generations. Cook warned that job displacement might precede job creation, potentially causing a rise in unemployment and a decline in labor force participation during the economic transition, which could result in considerable hardship for many families.

Echoing this sentiment, Fed Governor Michael Barr drew parallels to the electrification era, suggesting that AI's sizable returns might materialize slower than initially forecast. He referenced evidence from the manufacturing sector, where productivity often follows a "J-shape" curve after technology adoption: initial adjustment costs lead to short-run losses before firms that persist realize larger, long-run gains. This perspective highlights the need for strategic patience and robust planning to navigate the transitional phase of AI integration successfully. The survey also touched upon other business pressures, noting that 71% of CEOs reported tariffs pushing up costs, with 44% passing these costs to customers and 27% absorbing them, impacting profits. However, the dominant concern remains AI, signaling a fundamental re-evaluation of corporate risk landscapes.