Country risk facts for kids

Mean Country Risk, March 2000 - March 2011

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

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

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)

See also

In Spanish: Riesgo país para niños

• Credit rating agency
• National average salary
• Offshoring
• Workforce productivity