Businesses Brace for Increased Government Involvement

Corporate executives believe governments and regulators are second only to customers in their ability to impact a company’s economic value, according to a new survey by McKinsey.  For executives in financial services, energy and health care, governments and regulators rank as the number one stakeholder most likely to affect their company’s value.  Overall, half of executives surveyed say managing external affairs ranks as one of the top three priorities on CEO agendas. 

Despite the importance of government and regulatory officials, however, only 10 percent think their companies are effective at influencing decision-makers.  Moreover, in the wake of the financial crisis and severe global recession, more than six in 10 executives surveyed by McKinsey expect government/regulatory involvement in their industries to increase over the next three to five years.

When asked which strategies their companies were implementing effectively to influence government policy and regulatory decisions, executives cited identifying risks/opportunities and prioritizing stakeholders.  Two-thirds of executives say their companies should engage with governments and regulators “proactively and regularly” – yet fewer than half acknowledge their companies actually do.