Country risk refers to the risk of investing or lending in a country, arising from possible changes in the
business environment
Market environment and business environment are marketing terms that refer to factors and forces that affect a firm's ability to build and maintain successful customer relationships. The business environment has been defined as "the totality of ph ...
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
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" 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
* Fitch Ratings (U.S.)
* Moody's (U.S.)
* Standard & Poor's (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.
References
External links
Downloadable country analysis and reports
Coface Economic StudiesCredendo Country Risk RatingsThe Benche Analysis & ReportsEuler Hermes Country ReportsMaplecroftThe PRS Group, Inc.
Financial economics
Business terms
Sovereign default
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