Country risk

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Risk of investing or lending in a country

Categories of

Financial risk
Credit risk

* Settlement risk
* Concentration risk
* Sovereign risk
* Default risk

Market risk

* Interest rate risk
* Inflation risk
* Currency risk
* Equity risk
* Commodity risk
* Volatility risk
* Systemic risk
* Systematic risk

Liquidity risk

* Refinancing risk
* Deposit risk
* Margining risk

Investment risk

* Model risk
* Execution risk
* Valuation risk

Business risk

* Reputational risk
* Operational risk
* Country risk
* Political risk
* Legal risk
* Moral hazard

Profit risk
Non-financial risk

* Stranded asset

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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 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

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Higher scores in this table indicate less risky countries.

Country risk rankings Q4 2017  The least-risky countries for investment  Rank | Rank change | Country | Overall score

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1  | — | Singapore | 88.6
2  | — | Norway | 87.66
3  | — | Switzerland | 87.64
4  | — | Denmark | 85.67
5  | ▲2 | Sweden | 85.59
6  | ▼1 | Luxembourg | 83.85
7  | ▼1 | Netherlands | 83.76
8  | ▲4 | Finland | 83.1
9  | — | Canada | 82.98
10  | ▲1 | Australia | 82.18
Score out of 100. Rank change to previous quarter.

Source: Euromoney Country Risk - published January 2018. [1]

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 (U.S.)
* Moody's (U.S.)
* Standard & Poor's (U.S.)
* CTRISKS (Greater China)

## Partial list of political risk analysis organizations

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* 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
* National average salary
* Offshoring
* Workforce productivity
* EMBI+
* List of countries by natural disaster risk

## References

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1. ^ [1] Archived 2018-10-01 at the Wayback Machine: 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.

## External links

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### Downloadable country analysis and reports

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* Coface Economic Studies
* Credendo Country Risk Ratings
* The Benche Analysis & Reports[usurped]
* Euler Hermes Country Reports
* Maplecroft
* The PRS Group, Inc.

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Lists of countries by political rankings

Freedom|

* Freedom in the World
* Press
* World Press Freedom Index
* State Media
* Economic
* Economic Freedom of the World
* Global Enabling Trade Report
* Index of Economic Freedom

Corruption|

* Bribe Payers Index
* Corruption Perceptions Index
* Global Corruption Barometer

Competitiveness|

* Composite Index of National Capability
* WEF Global Competitiveness Report

History|

* Flag adoption date
* Formation date
* Largest empires
* Timeline of geopolitical changes
* before 1500
* 1500–1899
* 1900–1999
* 2000–present

Rights|

* Global Gender Gap Report
* LGBT rights by country or territory
* Privacy International
* World Justice Project Rule of Law Index
* Censorship by country
* Freedom of speech by country
* Internet censorship and surveillance by country

Democracy|

* Free and fair elections
* Democracy indices
* V-Dem Democracy Indices
* The Economist Democracy Index
* Bertelsmann Transformation Index
* Aspects
* Presidentialism metric
* Gallagher index
* Effective number of parties
* Direct democracy index

Other|

* Central bank independence indices
* Commitment to Development Index
* Consultation on rule-making
* Ease of doing business index
* Environmental Performance Index
* Fragile States Index
* Global Innovation Index
* Global Liveability Ranking
* Global Peace Index
* Global Slavery Index
* Global Terrorism Index
* Good Country Index
* Human Development Index
* Judicial independence metric
* Incarceration rate
* Legatum Prosperity Index
* OECD Better Life Index
* Political terror scale
* Satisfaction with Life Index

* List of international rankings
* Lists by country

Authority control databases

National|

* Germany
* United States
* France
* BnF data
* Israel

Other|

* Yale LUX

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