Political and geopolitical risk
What is country risk?
Country risk is the chance that conditions in a country hurt a foreign company's investment, trade or people. What it includes and how country risk ratings work.
Guide
Political and geopolitical riskLast updated
3 minute read
By Zed Three analysts
Short answer
Country risk is the chance that political, economic, security or regulatory conditions in a country cause losses for foreign companies, investors or lenders operating there. It combines political risk, economic and currency risk, conflict and crime, and legal risk, and is often summarized as a country risk rating or score.
Last updated
What country risk includes
Political stability and government action; macroeconomic and currency risk; conflict, terrorism and crime; sanctions and regulatory risk; and, for trade, exposure to ports and chokepoints.
How country risk ratings work
Ratings turn many indicators into a band or score so countries can be compared and changes spotted. Zed Three's World Threat Map scores 176 countries from 0 to 100 every week in five bands from Low to Severe. A rating is a starting point; the business decision depends on your specific exposure.
How companies use it
To screen new markets, set limits on credit or investment, decide where staff can travel, prioritize supplier audits and decide which risks to insure.
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Related country risk assessments
Frequently asked questions
What is the difference between country risk and sovereign risk?
Sovereign risk is the risk that a government defaults on its debt. Country risk is broader and covers every risk a foreign company faces there.
Which countries have the highest country risk?
See the World Threat Map for this week's scores. Countries at war, such as Iran, Ukraine, Sudan and Yemen, sit near the top.
How often do country risk ratings change?
Zed Three updates its scores weekly.
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