The PCI - A Global Risk Index For The Simultaneous Assessment of Macro and Company Individual Investment Risks

Abstract

Companies often have difficulties determining which criteria to base their
investment decisions in different countries on. When considering direct foreign
investment several risk indices are available. The PCI (Peren-Clement-Index) in its
original form was developed in 1998. Its further refinement improves the PCI in
three major ways: First, it offers a dynamic adjustment of criteria and consideration
of recent changes in the international environment. Second, it provides business
specificities of a company or its industrial sector to be considered in addition to
macroeconomic aspects by a two-dimensional presentation, which ensures a
customized assessment. Third, the PCI allows for consolidating investment
decisions by combining a resource-orientated with a market-oriented view. The PCI
allows, unlike other indices, a customized and company-specific strategic planning
process. Ultimately companies must take up both perspectives in the context of an
international investment decision. The use of risk indices in corporate planning
for assessing global investments decision creates a fundamentally new of risk
assessment.