Study on Political Risk Management by PricewaterhouseCoopers and Eurasia Group Reveals Multinational Companies Need a Rigorous Political Risk Management Framework

73 Percent of Surveyed Companies Do Not Feel They Have an Effective Political Risk Management Process

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| Source: PricewaterhouseCoopers

NEW YORK, March 30, 2006 (PRIMEZONE) -- Even the most risk averse companies are chasing new opportunities abroad, following customers and resources and seeking out lower cost suppliers in new markets, yet 73 percent do not feel that they are effectively managing these new political landscapes, according to a new study of over 100 multinational firms jointly conducted by PricewaterhouseCoopers (PwC), a global leader in enterprise risk management, and Eurasia Group, a leading political risk consulting firm. The two firms have formed an alliance to help international organizations integrate political risk management into their overall enterprise risk management process, enabling them to make better and more informed business decisions regarding their international strategy and operations.

"We're witnessing the rapid expansion of multinational organizations into unfamiliar yet extremely promising new markets -- yet after their initial review of the political environment, few companies are making the commitment to ongoing, structured monitoring and assessment of the political landscape," said PwC partner Fred Cohen. "Too often, organizations are relying on local sources to assess their political risk, leading to them to make incomplete business decisions because they may not have all the facts. To be successful, companies must ensure that updated, accurate assessments of political risk are routinely integrated into business development and operational decision making across the company."

Risk managers who responded to the survey expressed a need to approach political risk in a comprehensive way, monitoring the organization's international portfolio and integrating political risk analysis into their business operations. Seventy percent of the respondents analyze political risk in relation to new ventures, and 70 percent of those use internal resources, such as an M&A group or in-country contact, to do so. Yet once they are established, those same companies are less focused on ongoing monitoring of political risk, with only 24 percent of respondents reporting on political risk on a bi-annual or more frequent basis.

"Politics influences all of the other external risks firms face," says Eurasia Group president Ian Bremmer. "Whether it's the radically varied responses of countries to avian flu, the threat to energy prices from sudden crises in Iran or Nigeria, or the growing risks of protectionism from the United States -- politics create risks, and opportunities, for multinational corporations of all stripes. PricewaterhouseCoopers and Eurasia Group are in a truly unique position to address that reality."

The joint study found that European companies and companies with revenues in excess of $12 billion tend to have more formal processes for ongoing political risk management. Results revealed that greater international exposure as a result of heavy reliance on international assets or revenues leads companies to institutionalize political risk management. The study found that, compared with North American companies, European firms tend to take a more measured approach to dealing with risk, treating it as a normal part of business rather than placing disproportionate focus on potential catastrophes. Yet this same comfort level may lead them to overlook the need for more rigorous, regular assessment. Seventy-four percent of North American firms evaluated political risk during the investment stage compared to 65 percent of European companies. Fifty-six percent of North American respondents integrated political risk analysis into measures of their international business unit operations as compared to 42 percent of European respondents.

To help companies make more informed decisions regarding the impact of political risk on their business operations, PricewaterhouseCoopers and Eurasia Group will offer companies a political risk assessment (PRA) service. Companies who will benefit from this service include those with a material international presence, expansion plans into unfamiliar markets, limits on their geographic flexibility and those with considerable exposures to reputational risk. The political risk assessment service combines the enterprise risk management capabilities and global presence of PricewaterhouseCoopers with the political risk evaluation experience of Eurasia Group to help organizations systematically identify and manage the political risks that affect their businesses.

To learn more about the alliance and political risk assessment service, visit www.pwc.com/politicalrisk.

About PricewaterhouseCoopers

PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 130,000 people in 148 countries work collaboratively using connected thinking to develop fresh perspectives and practical advice.

"PricewaterhouseCoopers" refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.

About Eurasia Group

Eurasia Group (www.eurasiagroup.net) is the world's leading global political risk advisory and consulting firm. We cover political, social, security and economic developments worldwide. Our coverage is organized into four geographic practices -- Asia, Europe and Eurasia, Latin America, Middle East and Africa -- and four functional practices -- Global Macro, Global Energy, Homeland Security, BioSecurity. We offer our clients Advisory Services, Publications and Tailored Consulting, as well as direct access to Eurasia Group analysts. Our analysts cover political developments and their impact on business and financial markets on a daily basis. Eurasia Group also provides Programming Services that enable multinational companies to engage in direct dialogue with leaders from around the world.

About the PricewaterhouseCoopers and Eurasia Group Joint Survey

The PricewaterhouseCoopers and Eurasia Group political risk survey was conducted between December 2005 and February 2006. The target population was PricewaterhouseCoopers' largest clients worldwide (not including financial services organizations, which because of their unique exposures to political risk warrant separate attention), where English is generally spoken in the business community. By region, 62 interviews were conducted with North American companies, 43 with European companies and one with an Asian company. Forty respondents were in the industrial products industry, 19 were in retail and consumer products, 18 were in energy, utilities and mining, 12 were in technology and telecommunications, and 17 were in professional and personal services. Thirty-three respondents generate less than $3 billion in revenues; 45 companies generate between $3 and $12 billion in revenues and 24 generate in excess of $12 billion.

The PricewaterhouseCoopers logo is available at: http://www.primezone.com/newsroom/prs/?pkgid=2126

Linden, Alschuler & Kaplan
  for PricewaterhouseCoopers
 Suzanne Dawson
 (212) 329-1420
 

 PricewaterhouseCoopers
 Kathryn Oliver
 (860) 241-7333
 
 
 Eurasia Group
 Alexsandra Lloyd
 (646) 291-4036