Country risk

Country risk refers to the risk of investing in a country, dependent on changes in the business environment that may adversely affect operating profits or the value of assets in a specific 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 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.

Country risk ratings

Country risk rankings

Least risky countries, Score out of 100

Source: Euromoney Country risk March 2010^[1]

Rank	Previous	Country	Overall score
1	1	Norway	94.05
2	2	Luxembourg	92.35
3	3	Switzerland	90.65
4	4	Denmark	88.55
5	6	Finland	87.81
6	5	Sweden	86.81
7	7	Austria	86.50
8	11	Canada	86.09
9	8	Netherlands	84.86
10	9	Australia	84.16

The least-risky countries for investment. Ratings are further broken down into components including political risk, economic risk. Euromoney's bi-annual 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).

Mean Euromoney Country Risk, March 2000 - March 2011

Annual Trend in Euromoney Country Risk, March 2000 - March 2011

Partial list of country risk premium

• List of Credit Default Swap premiums of various countries (German) and English Translation

Partial list of credit risk rating agencies

• Fitch Ratings (U.S.)
• Moody's (U.S.)
• Standard & Poor's (U.S)
• Business Monitor International
• CTRISKS (Greater China)

Partial list of political risk analysis organizations

• Oxford Analytica
• Maplecroft
• Business Monitor International
• Country Risk Solutions
• Economist Intelligence Unit
• Eurasia Group
• The Legion Group
• The PRS Group, Inc.

Downloadable Country Analysis and Reports

• Maplecroft
• The Benche Analysis & Reports
• The PRS Group, Inc.

References

1. ^ [1]: Bi-annual 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.

This business term article is a stub. You can help Wikipedia by expanding it.v · Categories: Business term stubs Financial economics Business terms Wikimedia Foundation. 2010. Игры ⚽ Поможем решить контрольную работу Tim Fedewa Brown & Sharpe Look at other dictionaries: Country Risk — A collection of risks associated with investing in a foreign country. These risks include political risk, exchange rate risk, economic risk, sovereign risk and transfer risk, which is the risk of capital being locked up or frozen by government… …   Investment dictionary country risk — The general level of political, financial, and economic uncertainty in a country which impacts the value of the country s bonds and equities. See: sovereign risk. Bloomberg Financial Dictionary Risk associated with an FX ( foreign exchange)… …   Financial and business terms Country risk — General level of political and economic uncertainty in a country affecting the value of loans or investments in that country. The New York Times Financial Glossary * * * country risk country risk ➔ risk1 * * *    Risks associated with lending… …   Financial and business terms Country Risk Premium - CRP — The additional risk associated with investing in an international company rather than the domestic market. Macroeconomic factors such as political instability, volatile exchange rates and economic turmoil causes investors to be wary of overseas… …   Investment dictionary country risk — The risk of conducting transactions with, or holding assets of entities within, a particular country arising from political or economic events within that country. See political credit risk; transfer credit risk …   Big dictionary of business and management country risk — The risk of conducting transactions with, or holding assets in, a particular foreign country …   Accounting dictionary Country risk —   Refer instead to Transfer risk …   International financial encyclopaedia Risk — takers redirects here. For the Canadian television program, see Risk Takers. For other uses, see Risk (disambiguation). Risk is the potential that a chosen action or activity (including the choice of inaction) will lead to a loss (an undesirable… …   Wikipedia Transfer risk/country risk —   The sum of all counterparty credit risks whereby the counterparties are located in a specific country …   International financial encyclopaedia Risk — Typically defined as the standard deviation of the return on total investment. Degree of uncertainty of return on an asset. The New York Times Financial Glossary * * * ▪ I. risk risk 1 [rɪsk] noun 1. [countable, uncountable] the possibility that… …   Financial and business terms 18+ © Academic, 2000-2024 Contact us: Technical Support, Advertising Dictionaries export, created on PHP, Joomla, Drupal, WordPress, MODx. Mark and share Search through all dictionaries Translate… Search Internet Share the article and excerpts Direct link … Do a right-click on the link above and select “Copy Link”