Country Risk Service

A critical component of international investment and development is the risks associated with doing business in a foreign country. Moody’s Analytics Country Risk Service enables users to assess their risk profile along multiple dimensions for countries across the globe, focusing on the threats most critical to their operations. Our solution combines the subjective ratings of country experts with data-driven risk assessments to generate a more reliable and complete picture of short- and longer-term country risk.

The Core of the Service: Moody’s Analytics Country Risk Index

Moody’s Analytics Country Risk Index (MACRI) provides a standardized methodology to assess and compare investment risk across 191 countries. The MACRI provides a single country risk score, updated quarterly, that aggregates threats along six risk dimensions:

• Macroeconomic risk related to the natural cyclicality of the economy and the quality of monetary and fiscal policy.
• Business risk reflecting operational uncertainty from local conditions that businesses face daily.
• Financial risk from possible shifts in asset and liability valuations due to interest-rate and exchange-rate shocks.
• Social risk from either large-scale social upheaval or individual-level risks such as crime and disease affecting human resources.
• Political risk related to policy uncertainty and/or the possibility of large shifts in political conditions.
• Security risk to human life and property from war, geopolitical instability, natural disasters and climate change.

Users have the option of adjusting weights across the six dimensions to produce scores that most accurately match their risk preferences.

Supplementary Risk Indicators

To complement the MACRI’s broad view of risk, our Country Risk Service provides four supplementary indicators focused on short-run risk, updated monthly.

• Risk of Recession Indicator - Estimates the probability of a recession occurring over the next 12 months for 113 countries.
• Currency Depreciation Indicator - Provides a view to where depreciation events are most likely to occur across 108 different countries, estimating the risk over the next 12 months.
• Fiscal Space Indicator - Measures fiscal space risks associated with government debt for 78 countries.
• Economics Clarity & Surprise Indices - Assesses how the most recent data stack up against Moody’s Analytics forecast and a country’s historical performance for 73 countries.

Applications

• Inform investment strategy through comprehensive insight into risk factors within and across countries.
• Meet regulatory requirements for country monitoring to inform limit setting when lending overseas.
• Guide decision-making when expanding or managing business operations in another country.
• Enhance supply chain management through assessment of countries’ ability to manage shock.