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| Categories of |
| Financial risk |
|---|
 |
| Credit risk |
| Market risk |
| Liquidity risk |
| Investment risk |
| Business risk |
| Profit risk |
| Non-financial risk |
Country risk refers to the risk of investing or lending in a country, arising from possible changes in thebusiness environment that may adversely affect operating profits or the value of assets in the country. For example, financial factors such ascurrency 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 aspolitical 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 andcredit rating agencies use different methodologies to assess and rate countries' comparativerisk 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.
| Rank | Rank change | Country | Overall score |
|---|---|---|---|
| 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, specificallysovereign default risk and/or payment default risk for exporters (a.k.a. “trade credit” risk).
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