Country risk refers to the risk of investing or lending in a country, arising from possible changes in the
business environment that may adversely affect operating profits or the value of assets in the country. For example, financial factors such as
currency controls,
devaluation or regulatory changes, or stability factors such as mass riots,
civil war
A civil war is a war between organized groups within the same Sovereign state, state (or country). The aim of one side may be to take control of the country or a region, to achieve independence for a region, or to change government policies.J ...
and other potential events contribute to companies' operational risks. This term is also sometimes referred to as
political risk; however, country risk is a more general term that generally refers only to risks influencing all companies operating within or involved with a particular country.
Political risk analysis providers and
credit rating agencies use different methodologies to assess and rate countries' comparative
risk exposure. Credit rating agencies tend to use quantitative econometric models and focus on financial analysis, whereas political risk providers tend to use qualitative methods, focusing on political analysis. However, there is no consensus on methodology in assessing credit and political risks.
Ratings
Higher scores in this table indicate less risky countries.
Ratings are further broken down into components including political risk and economic risk. Euromoney's quarterly country risk index “Country Risk Survey” monitors the political and economic stability of 185 sovereign countries. Results focus foremost on economics, specifically
sovereign default risk and/or payment default risk for exporters (a.k.a. “trade credit” risk).
Partial list of credit risk rating agencies
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Fitch Ratings
Fitch Ratings Inc. is an American credit rating agency. It is one of the three nationally recognized statistical rating organizations (NRSRO) designated by the U.S. Securities and Exchange Commission and is considered as being one of the " Bi ...
(U.S.)
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Moody's (U.S.)
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Standard & Poor's
S&P Global Ratings (previously Standard & Poor's and informally known as S&P) is an American credit rating agency (CRA) and a division of S&P Global that publishes financial research and analysis on stocks, bonds, and commodities. S&P is co ...
(U.S.)
*
CTRISKS (Greater China)
Partial list of political risk analysis organizations
* Euromoney Country Risk, ECR
* IHS Country Risk
* BMI Research
* Country Risk Solutions
* Economist Intelligence Unit
* Eurasia Group
* Maplecroft
* Oxford Analytica
* The PRS Group, Inc.
See also
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Credit rating agency
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National average salary
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Offshoring
Offshoring is the relocation of a business process from one country to another—typically an operational process, such as manufacturing, or supporting processes, such as accounting. Usually this refers to a company business, although state gover ...
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Workforce productivity
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EMBI+
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List of countries by natural disaster risk
References
External links
Downloadable country analysis and reports
Coface Economic StudiesCredendo Country Risk Ratings*
Euler Hermes Country ReportsMaplecroftThe PRS Group, Inc.
Financial economics
Business terms
Sovereign default
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