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Financial Times: Hail to risk managers

21 September 2006

Regulatory risk comes in many sizes and measuring it is notoriously difficult. There is the variety that utilities worry about – the threat, say, that an appointed regulator will tighten the price cap a couple of revolutions more than anticipated – and then there is the scarier sort that puts travelling British executives in jail in the US at the stroke of a judge’s pen.

Capricious and over-zealous application of legislation and regulation – as in the case of the US clampdown on online gaming companies or Russia’s threats to hold up BP and Royal Dutch Shell’s projects there – is worth campaigning against. That is a task for corporate lobbies and, in extreme cases like these, for governments. But companies should not allow their sense of outrage or fear blind them to the opportunities that were the reason they originally pushed into promising but uncertain new territory. By pursuing those opportunities, they also apply strong, if indirect, market pressure to the authorities.

That is why we should applaud the bold stance of Andrew McIver, soon to take over as chief executive of Sportingbet, the online gaming group whose chairman suffered the indignity of a spell in a New York jail earlier this month and then resigned.

Mr McIver, far from shying away from the US market, wants to go after more customers and acquisitions there. By doing so, he may steal a march on his counterparts at rival companies, who seem cowed.

For corporate leaders, the prospect of a long weekend in Manhattan turning into a long weekend in Rikers Island is clearly chilling. But they risk misleading their shareholders – and, incidentally, undermining progress towards fair and open markets – if they play up the threats and renounce the potential rewards.

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