The UK has been labelled the second riskiest market to do business in by asset management and private equity firms, according to a Ropes & Gray survey.
The survey of 300 senior executives across North America, EMEA, Asia Pacific and Latin America across a variety of sectors, found 19% of asset managers and 14% of private equity houses viewed the UK as the market which posed the "most significant risk" their business.
It was second to only China among the most riskiest regions with many citing the regulatory and compliance issues that have heightened since the global financial crisis in 2008.
The UK was rated above average on almost every risk factor relative to other developed markets with the country scoring high risk ratings in "competition and antitrust", "regulation and compliance" and "cybersecurity", the survey found.
Amanda Raad, international risk partner at Ropes & Gray, said the UK's vote to leave the European Union had only added to the uncertainty with the firm stating asset managers had a "great deal to lose" in comparison to other sectors if Brexit negotiations do not go to plan.
"There has been such a dramatic change in the regulatory and enforcement landscape of the UK - just as there has been in China - over recent years that investors must quickly adapt. Added to this mix is Brexit, which is only adding to the uncertainty," Raad said.
China was viewed as the most risky market, receiving 38% and 36% of the vote from asset managers and private equity firms respectively, while the US was a close third behind the UK with 11% and 14%.
On China, the firm said: "Clearly, their fears about a broad range of risk factors in this marketplace, when combined with their ambitions for the world's second-largest economy, are front of mind."
While Colleen Conry, partner at Ropes & Grays, said one would expect US President Donald Trump's anti-regulation rhetoric would be seen as a positive for US businesses, so far the opposite has been true as it has added to uncertainty.
"We are in an environment our clients view as overly-regulated, and we are dealing with an administration that is focused on deregulation. How the government executes on its deregulation agenda is very uncertain."
The survey found regulation and compliance was seen as the top risk which multi-nationals were least prepared for with 80% of asset managers and 84% of private equity firms claiming they planned to devote more resources to this area moving forward.
Raad said: "Historically, the number of legal risks faced by investors as compared to financial and reputational risks have been minimal.
"However, over recent years, this framework has begun to change, and investors must also consider potential legal liability relating to corruption, money laundering, anti-trust, cybersecurity, data privacy and tax.
"At the same time, because the regulatory focus has slowly evolved over time, many companies have tried to address each risk on an individual basis, rather than taking a coordinated, centralised approach.
"This is leaving many companies now struggling to effectively prioritise and efficiently tackle the breadth of risks they face."
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