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Press release from Business Wire

Research Study Finds Nonfinancial Risks Directly Impact Technology Companies' Performance

Wednesday, October 17, 2012

Research Study Finds Nonfinancial Risks Directly Impact Technology Companies' Performance10:00 EDT Wednesday, October 17, 2012 HARTFORD, Conn. (Business Wire) -- A new study by CFO Research, sponsored by Travelers (NYSE: TRV), finds that the financial performance of a technology company is inextricably linked to how well it manages the entire range of risks to its business execution. Analysis of survey results reveals “red zone” risks, critical nonfinancial risks where respondents say their companies must take action to become adequately prepared. The full report on this study, titled The Finance View of Nonfinancial Risk for Technology Companies, is available for download at www.travelers.com/techcforeport and www.cfo.com/research. Nonfinancial risks are broadly defined as events or actions, other than financial transactions, that can negatively impact the operations or assets of a company. Using this definition, 62 percent of survey respondents agree that nonfinancial risk has become more of a concern in recent years. According to survey results, the top six critical nonfinancial risks faced by technology companies include: Business decline due to economic conditions Ability to hire and retain quality employees Performance failure of vendors and suppliers Breach of company's electronic or online data Failure to meet targets for business/customer growth U.S. regulatory compliance Four of these are “red zone” risks – those that finance executives say are critical, but for which they believe their companies are less prepared. These nonfinancial risks include economic conditions, hiring and retaining employees, supplier performance, and failure to meet growth targets. “Clearly, any of these directly impact a company's success,” said David Owens, Director of Research for CFO Research. “They are top of mind for many finance executives at technology companies.” To illustrate this point, many technology companies are increasingly relying on an extended and exposed supply chain. With 74 percent of respondents agreeing that their companies must now “get to market with upgrades or new products faster than ever,” ensuring the smooth functioning of the supply chain becomes even more important. Nonfinancial risks are real – and according to the research results – they have a definitive impact. For example, 44 percent of companies in the survey incurred unexpected increased costs in recent years from nonfinancial risks, 36 percent experienced damaged customer relationships and 33 percent were impacted by a business interruption or delay. “Our survey results illustrate the importance for everyone involved to heighten their awareness of emerging risks and understand potential impacts to their business. At Travelers, we offer comprehensive insurance solutions to assist technology companies looking to protect themselves from nonfinancial risks,” said Ronda Wescott, President of Global Technology, Travelers. “We help technology companies stay ahead of emerging risks by providing expert advice that is unmatched in the industry.” Faced with a broad range of nonfinancial risks, many finance executives in the survey stress that diligence and “keeping informed” are keys to being prepared for the unknown and the unexpected. According to survey respondents, success for a technology company comes from diligently and continuously putting in the work that is required to become more proactive in their approach to managing nonfinancial risks and building a culture in which all employees are highly attuned to the consequences of nonfinancial risks. This study is based on 209 electronic survey responses from senior finance executives at U.S. companies. Survey respondents work for a variety of technology-related companies. About CFO ResearchCFO Research is the sponsored research group of CFO Publishing LLC. CFO Publishing LLC, a portfolio company of Seguin Partners, is the leading business-to-business media brand focused on the information needs of senior finance executives. The business consists of CFO magazine, CFO.com, CFO Research, and CFO Conferences. CFO Publishing's award-winning editorial content and loyal, influential audience make it a valued resource for its readers as well as an effective marketing partner for a wide range of blue-chip companies. CFO Publishing has long-standing relationships with more than 500,000 finance executives. About TravelersThe Travelers Companies, Inc. (NYSE: TRV) is a leading provider of property casualty insurance for auto, home and business. The company's diverse business lines offer its global customers a wide range of coverage sold primarily through independent agents and brokers. A component of the Dow Jones Industrial Average, Travelers has more than 30,000 employees and operations in the United States and selected international markets. The company generated revenues of approximately $25 billion in 2011. For more information, visit www.travelers.com. The Travelers Companies, Inc.Gail Van Cleaf, 651-310-6902gvanclea@travelers.com