CORISK

Country Risk is Corporate Risk

Comprehensive risk picture per market

Corisk offers clients an independent risk picture of 50 different country risks across more than 150 countries. The risk picture is presented with intuitive graphics and to-the-point explanations, for use towards Top Management or Board of Directors. Quantified risks enable direct comparison across countries, markets, and continents. The strength of the risk picture is in it being research based and modeled, which makes it possible to establish risk levels without resort to subjective assessment. To ensure an updated risk picture, it is being supplied with textual comments in accordance with the latest risk development on the ground, without altering or adjusting the .risk levels (scores) themselves. 

The identified and quantified country risks are being grouped into four categories, where the final release of unfinished risks is given in brackets: 

Economic risk (10): Recession impact, Stagnation, Inflation, Price controls (July), Depreciation, Sovereign default, Risk to capital, Volatile taxation, Discriminate taxation, Sanctions (July).

Political risk (10): State failure, Democratic backsliding (July), Policy change, Government change,  Government opaqueness, Regulatory incompetence, Value chain restrictions (July), Ownership restrictions (July), Expropriation, Anti-foreign sentiment.

Legal risk (10): Litigation risk (July), Judiciary incompetence (July), Deficient enforcement (July), Contract alteration (July), License alteration (July), Censorship (July), Surveillance (July), Land rights violation, Labour right violations (July), Slavery and trafficking (July).

Security risk (10): People safety, Property security, Terrorism, Social revolution, Ethnic conflict, Civil War, War, Military coup, State violence and atrocities.

Operational risk (10): Climate impact,  Natural disasters, Environmental degradation (July),Epidemic impact (July), Infrastructure disruption, Cyber threats (July), Corruption, Deficient competition (July), Fraud and money laundry, Expat hardship.

Structural or predictive country risk?

It is impossible to predict economic or political events, at least with sufficiently early warning for the client to mitigate the consequences. Therefore, Corisk recommends identifying more long-term, structural country risk. What can reasonably be expected to happen in this country within the next 1-10 years, and how can we prepare for it and minimize potential impact? The client does not need to take a stand on predictions over the date for the next coup or civil war. It is more fruitful to know whether they are likely to happen. 

The difference between structural and predictive country risk analysis can be compared to a pasient who is eager to know the risk of future, chronic illness. While the predictive analyst would attach body sensors to continuously monitor the potential outbreak of illness, the structural analyst would prescribe a genetic test or a blood sample to establish the patient’s fundamental disposition for illness. Structural risk analysis allows for earlier warning, while the predictive analysis becomes valuable first when the symptoms start to appear.

Corisk Structural Country Risk Model was originally developed by Telenor Group from 2016, and was considerably revised in 2020-2021 with updates based on the latest research within economics, political science, and conflict research. The model applies indicator-based analysis, where more than 200 independent variables (input) are given weights as causal determinants of 50 compound country risks (output).

The relationship between independent and dependent variables are collected from thorough and critical examinations of the research frontier of the social sciences. We emphasise well-documented findings from renowned scientific programs and regression analysis of openly available datasets. Important theoretical inspirations and research findings have been retrieved from the Bank for International Settlement, University of Bocconi, Columbia University, Bank of England, University of Essex, EU projects (AntiCorrp, GCRI, Proton), FATF, Federal Reserve, Fitch, GermanWatch, University of Gothenburg, The Hague Centre for Strategic Studies, Harvard University, Heritage Foundation, The US Holocaust Memorial Museum, ICRG, IDEA, IMF, IPCC, University of Maryland, Michigan State University, Moody’s, The US Naval Academy, New York University, University of Notre Dame, Universitety of Oslo, University of Oxford, University of Pennsylvania, PITF, PRIO, PRS, University of St Andrews, SIPRI, Bank of Spain, Standard & Poor, Tsinghua University, UNEP, United Nations University, Uppsala University, Verdensbanken, University of Vienna, ETH Zürich, ond University of Zürich.

A full documentation of the model methodology and data will be available by the summer of 2022.

 

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