Country Risk Map Q2 2017

The Atradius Risk Map indicates the level of risk associated with each country, based on the Atradius in-house political risk rating system, STAR

The Atradius Risk Map is drawn from a range of sources and features the STAR rating system. This is a system devised by the Atradius Economic Research Team for assessing country risk, including different political and economic risks, or civil unrest and conflict.

Country Movement Focus

In the figure below you can see every country colored with their respective level of risk that has been assessed using the STAR rating system.

 

 

Country Risk Map Q2 2017

 

 

 

Three countries in particular have experienced major domestic changes, which affected their level of country risk: 

Country mOVEMENT FOCUS
South Africa The dismissal of the Minister of Finance
has heightened policy uncertainty
in South Africa. This has increased
risk particularly due to the country’s
dependence on portfolio investment.
Lower investor confidence will continue
to weigh on the rand and put upward
pressure on inflation.
Qatar Qatar’s economy is resource-dependent
which has fed into rising external vulnerability
but its financial buffers remain high.
However, there is high uncertainty around the
diplomatic crisis and length of the economic
boycott from some of its neighbours which
could exacerbate its vulnerabilities and weigh
on economic growth.
Senegal The political situation in Senegal is
consistently stable and a steady reform
agenda including fiscal consolidation is
helping to ease country risk. Economic
growth is forecast to remain high,
driven by investments, especially in
infrastructure. Corruption and dependence
on external financing are still problematic.

Country risk

Companies that do business internationally rely on the stability of the business environment in the foreign country. Profits and investments can be vulnerable to adverse developments in this environment. These risks are broadly termed ‘country risk’. The level and change in country risk is, therefore, an important strategic and operational indicator for international companies.

Country risk covers a wide range of factors such as political developments, the risk of (armed) conflict and sovereign financial situation. These factors relate, for example, to regulatory changes, the risk of confiscation, civil unrest, war, currency controls and devaluations. Country risk takes into account a sovereign’s willingness and ability to pay and the impact of this on the ability of public or private entities to meet their cross-border payment obligations. Under our political risk cover contract, we provide cover against a subset of ‘country risk’ events. If you would like to learn more information about an individual market and their STAR rating, see our Country Reports.

The Atradius STAR rating

STAR is the Atradius in-house political risk rating. STAR stands for Sovereign Transfer and Arbitrary Risk and represents a rating system for assessing country risk. The STAR rating is a summary measure of political risk relevant to the Atradius insurance contract and explicitly targets the impact on public or private entities with cross-border payment obligations.

Broadly speaking, the default triggers under an Atradius Political Risk Policy are classed as either Sovereign Transfer or Arbitrary Risk.

The STAR rating runs on a scale from 1 to 10, where 1 represents the lowest risk and 10 the highest risk. The 10 rating steps are aggregated into five broad categories to allow their interpretation in terms of credit quality. Starting from the most benign part of the quality spectrum, these categories range from ‘Low Risk’ to ‘Very High Risk’.

 

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Disclaimer

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