Country Risk Methodology
To obtain the overall country risk score, Euromoney assigns a weighting to nine categories. These are political risk (25% weighting), economic performance (25%), debt indicators (10%), Debt in default or rescheduled (10%), credit ratings (10%), access to bank finance (5%), access to short-term finance (5%), access to capital markets (5%), discount on forfaiting (5%).
The best underlying value per category achieves the full weighting (25, 10 or 5); the worst scores zero and all other values are calculated relative to these two. The formula used is the following: A-(A/(B-C)) x (D-C), where A = category weighting; B = lowest value* in range; C = highest value* in range, D = individual value.
*NB for debt indicators and debt in default, B and C are reversed in the formula, as the lowest score receives the full weighting and the highest gets zero.
Political risk (25% weighting): the risk of non-payment or non-servicing of payment for goods or services, loans, trade-related finance and dividends, and the non-repatriation of capital. Risk analysts give each country a score between 10 and zero - the higher, the better. This does not reflect the creditworthiness of individual counterparties.