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Country risk

Country risk

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 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 affecting 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

**Country risk rankings Q4 2017** The least-risky countries for investment
RankRank changeCountryOverall score
1-Singapore88.6
2-Norway87.66
3-Switzerland87.64
4-Denmark85.67
5▲2Sweden85.59
6▼1Luxembourg83.85
7▼1Netherlands83.76
8▲4Finland83.1
9-Canada82.98
10▲1Australia82.18
Score out of 100. Rank change to previous quarter. Source: Euromoney Country Risk - published January 2018. [1]

The least-risky countries for investment. Ratings are further broken down into components including political risk, economic risk. Euromoney's quarterly country risk index "Country risk survey" [23] 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 country risk premium

  • List of Credit Default Swap premiums of various countries (German) [24] and English Translation [25]

Partial list of credit risk rating agencies

  • Fitch Ratings (U.S.) [26]

  • Moody's (U.S.) [27]

  • Standard & Poor's (U.S) [28]

  • CTRISKS (Greater China) [29]

Partial list of political risk analysis organizations

  • Euromoney Country Risk, ECR [30]

  • IHS Country Risk [31]

  • BMI Research [32]

  • Country Risk Solutions [33]

  • Economist Intelligence Unit [34]

  • Eurasia Group [35]

  • Maplecroft [36]

  • Oxford Analytica [37]

  • The PRS Group, Inc. [38]

Downloadable country analysis and reports

  • Coface Economic Studies [39]

  • Credendo Country Risk Ratings [40]

  • The Benche Analysis & Reports [41]

  • Euler Hermes Country Reports [42]

  • Maplecroft [43]

  • The PRS Group, Inc. [44]

References

[1]
Citation Linkwww.euromoney.com[1]: Survey which monitors the political and economic stability of 185 sovereign countries, according to ratings agencies and market experts. The information is compiled from Risk analysts; poll of economic projections; on GNI; World Bank’s Global Development Finance data; Moody’s Investors Service, Standard & Poor’s and Fitch IBCA; OECD consensus groups (source: ECGD); the US Exim Bank and Atradius UK; heads of debt syndicate and loan syndications; Atradius, London Forfaiting, Mezra Forfaiting and WestLB.
Sep 29, 2019, 7:36 AM
[2]
Citation Linkweb.archive.orgList of Credit Default Swap premiums of various countries (German)
Sep 29, 2019, 7:36 AM
[3]
Citation Linkweb.archive.orgEnglish Translation
Sep 29, 2019, 7:36 AM
[4]
Citation Linkwww.fitchratings.comFitch Ratings (U.S.)
Sep 29, 2019, 7:36 AM
[5]
Citation Linkweb.archive.orgMoody's (U.S.)
Sep 29, 2019, 7:36 AM
[6]
Citation Linkwww.standardandpoors.comStandard & Poor's (U.S)
Sep 29, 2019, 7:36 AM
[7]
Citation Linkwww.ctrisks.comCTRISKS (Greater China)
Sep 29, 2019, 7:36 AM
[8]
Citation Linkwww.euromoneycountryrisk.comEuromoney Country Risk, ECR
Sep 29, 2019, 7:36 AM
[9]
Citation Linkwww.ihs.comIHS Country Risk
Sep 29, 2019, 7:36 AM
[10]
Citation Linkwww.bmiresearch.comBMI Research
Sep 29, 2019, 7:36 AM
[11]
Citation Linkwww.countryrisksolutions.comCountry Risk Solutions
Sep 29, 2019, 7:36 AM
[12]
Citation Linkstore.eiu.comEconomist Intelligence Unit
Sep 29, 2019, 7:36 AM
[13]
Citation Linkwww.eurasiagroup.netEurasia Group
Sep 29, 2019, 7:36 AM
[14]
Citation Linkwww.maplecroft.comMaplecroft
Sep 29, 2019, 7:36 AM
[15]
Citation Linkwww.oxan.comOxford Analytica
Sep 29, 2019, 7:36 AM
[16]
Citation Linkwww.prsgroup.comThe PRS Group, Inc.
Sep 29, 2019, 7:36 AM
[17]
Citation Linkwww.coface.comCoface Economic Studies
Sep 29, 2019, 7:36 AM
[18]
Citation Linkwww.credendo.comCredendo Country Risk Ratings
Sep 29, 2019, 7:36 AM
[19]
Citation Linkweb.archive.orgThe Benche Analysis & Reports
Sep 29, 2019, 7:36 AM
[20]
Citation Linkwww.eulerhermes.comEuler Hermes Country Reports
Sep 29, 2019, 7:36 AM