Governance, Risk Management and Compliance: Significant Benefits Outweigh the Costs, According to PricewaterhouseCoopers' Eighth Annual Global CEO Survey

Benefits Include Enhanced Brand Reputation and Shareholder Confidence, but CEOs Struggle with Implementation

New York, New York, UNITED STATES

NEW YORK, Jan. 26, 2005 (PRIMEZONE) -- Building robust corporate governance systems and processes, managing risk on a global scale, and complying with an increasingly vast web of regulatory requirements is difficult, costly and time consuming work; however, according to PricewaterhouseCoopers' Eighth Annual Global CEO Survey, CEOs, worldwide, think it is well worth the effort.

Of more than 1,300 CEOs, 43 percent consider governance, risk management and compliance (GRC) a value driver and a source of competitive advantage, and 56 percent believe that it has a positive effect on reputation and brand. However, responses indicate that effective governance, risk management and compliance are not easily achieved and that CEOs are struggling with their implementation.

"Over the last three and a half years, CEOs have focused on complying with new laws and regulations, putting new risk management processes in place and strengthening corporate governance procedures," said Samuel A. DiPiazza, Global Chief Executive Officer of PricewaterhouseCoopers. "This has not been an easy task, but for CEOs who view these changes as investments rather than costs, the payoff has been well worth the effort -- specifically, when measured in terms of performance improvement, greater transparency and movement toward a more sustainable enterprise."

The survey shows that there are clear benefits to effective GRC; however, responses overwhelmingly demonstrate that CEOs face numerous challenges when it comes to implementation and, ultimately, to realising these benefits.

While a majority of CEOs surveyed are confident that they can respond to governance, risk management and compliance issues in their domestic operations, only one quarter say they can very effectively respond to foreign laws and regulations and to internal policies and procedures in foreign business units.

The survey also shows that CEOs are struggling with effective implementation. While 53 percent feel that codes of conduct are fully developed in their companies, far fewer believe that their compliance and ethics training programs meet the same standards. A third of CEOs feel that their measurement of performance in these areas is not well-developed if at all.

The majority of CEOs surveyed, however, recognize that governance, risk management and compliance have a positive effect on reducing legal liabilities (64 percent) and on enhancing reputation and brand. Additionally, the 58 percent of CEOs who consider GRC expenditures an investment see greater benefits than those who view it as a cost. These executives believe that GRC is a value driver, a source of competitive advantage, and an aid in enabling them to take risks to create value.

"There is no question that CEOs have a long way to go when it comes to effectively implementing GRC. And, while our survey shows that CEOs widely recognise the benefits, they must realise that only those who implement GRC in a meaningful way will see a clear return on investment, specifically as it relates to higher shareholder value," said DiPiazza.

In this report, four global business leaders provided in-depth, personal perspectives on how they and their organisations are meeting the challenges of GRC. These leaders include:

    -- Leif Johansson, President and CEO, Volvo Group
    -- Michael McCallister, President and CEO, Humana Inc.
    -- Fernando Roberto Moreira Salles, CEO, Companhia Brasileira de
       Metalurgia e Mineracao (CBMM)
    -- Captain Wei Jiafu, President and CEO, COSCO Group

PricewaterhouseCoopers ( provides industry-focused assurance, tax and advisory services for public and private clients. More than 120,000 people in 144 countries connect their thinking, experience and solutions to build public trust and enhance value for clients and their stakeholders.

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

(C) 2004 PricewaterhouseCoopers. All rights reserved.

-- Editor's Note: Executive Summary Available Upon Request

Survey Methodology

For the eighth edition of PricewaterhouseCoopers' Global CEO Survey, 1,324 interviews with CEOs were conducted throughout the world between September and November 2004. The majority of interviews were conducted on the telephone, with regional exceptions in Japan, where a postal survey was administered, and in China, Kenya, and Nigeria, where face-to-face interviews took place. The research effort was coordinated by PricewaterhouseCoopers International Survey Unit, located in Belfast, Northern Ireland, in close cooperation with a team of project managers and members of a global advisory board of PricewaterhouseCoopers partners.

By region, 392 interviews were conducted in Europe, 224 in the United States (plus, in North America, 80 in Canada and 39 in Mexico), 257 in South America, 297 in the Asia-Pacific region, and 35 in Africa. By industry, financial services companies represent 18 percent of the interviews; technology and media companies represent 10 percent; and companies in the products sector (consumer and industrial products manufacturers, distributors, and retailers) represent 72 percent.

Twenty-seven percent of the respondents' companies earn revenues in excess of $1 billion; 13 percent earn $500 million to $1 billion; 51 percent earn less than $500 million; and 9 percent offered no information. Regionally, the highest concentration of companies earning more than $1 billion is in Europe (37 percent), followed by Asia-Pacific (32 percent), and the U.S. (30 percent).

The vast majority of survey participants report revenue growth over the last three years, with the largest number of CEOs being in the 5 percent to 10 percent range. Sixteen percent indicate revenue growth of more than 20 percent; 21 percent report 11 percent to 20 percent growth; and 23 percent are in the 0 percent to 4 percent range. Only 6 percent of respondents report negative growth.

Regarding earnings over the same period, the largest number of respondents (26 percent) report growth in excess of 20 percent. Twenty-two percent indicate growth of 11 percent to 20 percent; 23 percent report 5 percent to 10 percent growth; and 24 percent are in the 0 percent to 4 percent range. Only 6 percent of respondents report negative earnings growth.

Forty-one percent of respondents serve on boards of directors other than their own. Of these, 10 percent serve on more than five boards, 7 percent on five, 11 percent on four, 15 percent on three, and 28 percent on one. The largest number of CEOs (29 percent) serve on two other boards.


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