Keywords: country risk
Source: Wikipedia
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.
