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Member, Beacon International Group, Ltd.
Special interest groups likely will cause greater risk management headaches for companies, particularly those investing overseas, in the next few years, a consulting firm says.
"Doing business internationally in 1997 is likely to prove more complex as pressure groups place an even greater onus of accountability on international corporations," London-based Control Risks Group Ltd. said in Outlook 97, its annual preview of political and security risks.
A survey of overseas business development directors of 51 major companies in Europe found that 57% of directors expected the risks posed by special interest groups to increase in the next five years. The survey was conducted for the report by Industrial Research Bureau in London.
"Pressure groups already influence investment decisions in some companies, and we believe that more companies will be affected in the future as demands for commercial accountability increase," said John Bray, Control Risks' principal research consultant.
The survey looked at the impact of advocacy groups on: the environment, human rights, labor standards-people working in poor conditions- and corruption, including commercial bribes.
Most directors surveyed were anxious to start dialogue with special interest groups, with 90% saying it was possible to work-or negotiate their positions-with activists on the environment and 77% on labor standards. In practice, however, many businesses do little to develop ties with such groups, Control Risks said.
"Just one (company) in eight has a formal procedure in place to evaluate pressure groups, and only one in five has a procedure for formal dialogue," according to Control Risks.
Outlook 97 is available from Control Risks for (British pounds) 140 ($225) by calling 44-171-222-1552.