Project risk and required rate of return Petroleum companies use higher required rates for exploration than for refining. Both of these activities are likely to have higher required rates of return than would petroleum companies marketing projects. Companies with foreign operations find it even more difficult (and important) to adjust for risk in overseas projects. There is additional uncertainty inherent in operating outside Europe. The local political climate and consequent risk of takeover by foreign governments are relevant considerations in many international capital-budgeting decisions.
