Managing regulatory risk is one of the chief concerns of senior executives in risk management, a survey found.

The Economist Intelligence Unit Ltd.'s online survey of 320 senior executives with responsibility for risk found that 53% said problems caused by new or existing regulations represented a very high or high risk to their company’s operations. That was second only to the risk that the market value of assets would fall, and slightly ahead of the risk of bad debt. The survey was conducted in September.

In comparison, terrorism and natural disasters pose a very high or high risk to 19% and 18% of respondents, respectively.

About half of the respondents work in the financial services industry, with professional services, health care, technology and manufacturing firms also represented, among others.

The quality and quantity of regulations appears to be causing concern, according to the report. About 66% of those polled cited complexity as the largest impediment posed by regulatory regimes, with another 46% blaming the discrepancies between regulations in different jurisdictions.

The recent credit crisis will result in new regulations, according to many of the executives surveyed. More than six in 10 respondents expect the crisis to provoke new liquidity standards and higher capital ratios to account for off-balance-sheet vehicles. More than five in 10 expect tightened regulation of loan originators and stricter oversight of rating agencies.

But businesses already appear to have begun preparing for and responding to regulatory risk.

About 43% of respondents said their businesses had increased significantly the amount of time and resources devoted to regulatory risk in the last three years, while 41% reported a slight increase. About 39% predicted a substantial increase in their efforts over the next three years, while another 43% said they expect a slight increase during that time.

Audit and reporting regulations—such as the Sarbanes-Oxley Act and Europe's Solvency II—consume the most time and resources of all regulations, according to 75% of those polled. About 35% called workforce regulations the most burdensome. Respondents could pick three kinds of regulations to call highly burdensome.

One common weakness for a business may be monitoring the regulatory compliance of firms in their supply chain or partner businesses. Only three in 10 respondents said they asked about the regulatory compliance of partners or firms in the supply chain or successfully monitored their compliance, according to the poll.

The survey ranks the United States as the most onerous country by far, with 36% of those polled calling American regulations highly burdensome, compared with 26% for China, 24% for India and 23% for the United Kingdom.

Still, most of those polled saw benefit from regulatory compliance. A little more than half said “effective regulatory risk management” would produce more efficient business processes, and 48% said it would give them a competitive advantage.

The survey was conducted by the London-based Economist Intelligence Unit on behalf of Swiss-domiciled ACE Ltd.; the Swiss auditing firm KPMG L.L.P.; Walldorf, Germany-based SAP and Stamford, Conn.-based Towers Perrin.

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