Northern Ireland's tentative economic recovery will be threatened if violent disorder continues to generate negative headlines for the region, the secretary of state has warned.
Ms Villiers, who marked a year in post yesterday, welcomed a forthcoming cross-party talks process at Stormont to resolve outstanding political issues, such as parades and flags, but stressed that it alone would not address the deep-seated divisions that still exist.
"It is damaging for Northern Ireland because those scenes of violence make it into the news and they are picked up internationally," she said.
"Even if it's just a couple of streets in east Belfast or north Belfast, that can be headlining the news in Canada or the US or Australia so it does make it less easy to convince the world that Northern Ireland is a great place to visit, to study, to live and above all to invest in and build a business."
The Conservative MP added: "We are seeing some signs that the Northern Ireland economy is healing and Northern Ireland has a very strong record with inward investment but it is harder to attract investors if they associate Northern Ireland with riots and violence."
Ms Villiers said she was not aware that the plug had been pulled on any pending deals, but she warned that further unrest could undermine the chances of drawing new business to the region.
"I hope we can still convince the world that Northern Ireland is a great place to invest but it is made more difficult to convince people that they should come and set up their factory or their business in Northern Ireland if they have a perception that it's a place that is very divided, very tense and with a tendency to see that tension manifested by riots on the streets."
The secretary of state expressed hope that an upcoming international investment conference in Belfast, which will be attended by Prime Minister David Cameron, would deliver results.
While the Government unveiled a financial package to assist the region's economic recovery in June, the business sector has criticised Downing Street's decision to hold off, until late next year, making a final determination on whether the devolved administration will be handed powers to reduce its rate of corporation tax – a potentially significant financial incentive for would-be investors.