Methodology

  • About Us

    Euromoney Country Risk (ECR) is an online community of economic and political experts that provides real time scores in categories that relate to economic, structural and political risk. The consensus expert scores, combined with scores on sovereign borrowers' access to international capital markets, together with data from the IMF/ World Bank on debt indicators, create the Euromoney Country Risk score for 186 individual countries.

    ECR evaluates the investment risk of a country, such as risk of default on a bond, risk of losing direct investment, risk to global business relations etc., by taking a qualitative model, which seeks an expert opinion on risk variables within a country (90% weighting) and combining it with a basic quantitative value (10% weighting).

    The qualitative score is visible independently of the ECR score, and it reflects a snapshot of a country's current position.

    The ECR score is displayed on a 100 point scale, with 100 being nearly devoid of any risk, and 0 being completely exposed to every risk.

  • Combined Euromoney Country Risk score

    To obtain the overall Euromoney Country Risk score, we assign a weighting to five categories. The four qualitative expert opinions are political risk (35% weighting), economic risk (35%), structural risk (10%) and access to international capital markets (10%). The quantitative value comes from the sovereign debt indicators (10%)
  • The qualitative average

    Views are collated from experts around the world, and the qualitative average is produced by combining evaluations of political, economic, and structural risk, together with assessments of sovereign access to international capital markets.

    When applying political, economic, and structural assessments to a 100 point scale for the qualitative average only (rather than the full Euromoney Country Risk score), the following weighting is used: political 45%, economic 45%, and structural 10%.

  • Qualitative assessments

    Economic risk: participants rate each country for which they have knowledge from 0-10 across 6 sub factors to equal a score out of 100. The categories of economic risk scored are as follows: bank stability/ risk; GNP outlook; unemployment rate; government finances; monetary policy/ currency stability.

    Political risk: participants rate each country for which they have knowledge from 0-10 across 5 sub factors to equal a score out of 100. The categories of political risk scored are as follows: corruption; government non-payments/ non-repatriation; government stability; information access/ transparency; institutional risk; regulatory and policy environment.

    Structural risk: participants rate each country for which they have knowledge from 0-10 across 4 sub factors to equal a score out of 100. The categories of structural risk scored are as follows: demographics; hard infrastructure; labour market/ industrial relations; soft infrastructure.

    Access to international capital markets: participants rate each country's accessibility to international markets on a scale of 0-10 (0=no access at all and 10=full access). These scores are averaged and then weighted to 10%.

    Individual experts must apply a value to each sub factor before their score is accepted into the system.

    Within each sub factor, ECR also asks experts for further information on the reasons behind each individual score, and these fall under the category of related factors. These are more like poll points, and do not directly affect the score. Instead, they inform a change made to a sub factor score and weight. For example, within the economic risk category of bank stability lie four further related factors: regulatory risk, trading exposures, asset quality and undercapitalisation. Individual experts are able to add more related factors and ignore ones which are not applicable.

  • The quantitative score factors

    • Debt indicators

      Calculated using the following ratios from the World Bank's Global Development Finance figures: total debt stocks to GNP (A), debt service to exports (B); current account balance to GNP (C). Developing countries which do not report complete debt data get a score of zero.
  • Scoring guidelines

    Please complete all the assessments (economic, political and structural) for the countries which you are scoring.

    It is important to note that regardless of a user's privacy settings, your individual score is always private and no other experts or subscribers in the system can see it.

  • Economic assessment

    • Bank stability/risk

      A measure of banking sector strength. 10 = a perfectly functioning system with all possible exposures comfortably covered. 0 = a systemic breakdown in the banking system has occurred.
    • Economic-GNP outlook

      A measure of optimism/ pessimism for the for economic growth outlook. 10 = a strong likelihood of unprecedented and transformational growth. 0 = a strong likelihood of a catastrophic recession.
    • Employment/unemployment

      Measures the risk posed to the economy by unemployment. 10 = unemployment poses no risk to the economy. 0 = unemployment poses a critical threat to the economy.
    • Government finances

      Measures a country's fiscal strength. 10 = the fiscal position is highly solid and consistently generates huge surpluses. 0 = the fiscal position is unsustainable and default is almost certain to occur.
    • Monetary policy/currency stability

      A measure of monetary policy effectiveness/exchange rate risk. 10 = monetary policy is totally credible, effectively implemented and exchange rate risk is non-existent. 0 = monetary policy lacks any credibility and that the currency has already collapsed.
  • Political assessment

    • Corruption

      A measure of how corruption affects country risk. 10 = there is no corruption. 0 = corruption is endemic and a serious drag on stability and a major contributor of risk.
    • Government non-payments/non-repatriation

      A measure of the risk government policies and actions pose to financial transfers. 10 = there is a non-existent risk of government interference. dem0 = there is an extremely high risk of government interference.
    • Government stability

      A measure of how stable a government is. 10 = the government is extremely stable. 0 = the country has no functioning government and has already become a failed state.
    • Information access/transparency

      A measure of the accessibility and reliability of information and statistics. 10 = the flow of information is completely unrestricted/ data is timely and highly reliable. 0 = the flow of information is totally restricted/no reliable statistical data exists.
    • Institutional risk

      A measure of the independence and efficiency of state institutions. 10 = institutions are extremely efficient and totally independent. 0 = state institutions are non-existent.
    • Regulatory and policy environment

      A measure of the quality of the regulatory environment and how well policy is formulated/ implemented. 10 = an extremely consistent, well-enforced regulatory environment and benevolent government policies. 0 = no regulatory environment exists.
  • Structural assessment

    • Demographics

      A measure of the impact of the demographic profile on economic growth and political stability. 10 = an economically sustainable birth rate and a low dependency-ratio that is resulting in unprecedented, long-term economic growth. 0 = demographic imbalances have catastrophically affected economic growth and political stability
    • Hard infrastructure

      A measure of the adequacy of a country's physical infrastructure. 10 = physical infrastructure meets all the country's foreseeable needs and is perfectly-maintained. 0 = physical infrastructure is non-existent/entirely inadequate for a country's needs.
    • Labour market/industrial relations

      A measure of the suitability of the labour environment for economic growth and political stability. 10 = a well-regulated and functioning labour environment. 0= a restrictive, volatile and unregulated labour environment.
    • Soft infrastructure

      A measure of the health of the economic, medical and cultural/social institutions of a country. 10 = a highly skilled labour force, well supported by perfectly functioning social institutions. 0 = a country's social institutions are non-existent or have totally broken down