Country Risk Assessment & Ratings Guide 2026: How to Evaluate Any Country

If your company has people, assets, or supply chain dependencies in another country, you need a country risk assessment. Not a vague sense of whether a country is "stable" or "risky" -- a structured evaluation that tells you exactly what threats exist, how likely they are, and what they mean for your specific operations.

The problem is that most country risk assessment resources are written for sovereign debt analysts at banks or political science researchers at universities. They are not written for the operations director at a $15M manufacturing company who just opened a factory in Vietnam, or the HSE manager at a solar energy firm with installations across three West African countries.

This guide is written for those people. We will cover what a country risk assessment actually is, what the major rating systems measure, how to conduct your own assessment without a $200K consulting engagement, and how to keep it current once you have one. For a deeper look at the political dimension specifically, see our Political Risk Services Guide.

What Is a Country Risk Assessment?

A country risk assessment is a structured evaluation of the threats and vulnerabilities associated with operating in a specific country. It examines political stability, security conditions, economic fundamentals, regulatory environment, infrastructure quality, and natural hazard exposure -- then synthesizes those factors into a picture of what could go wrong, how likely it is, and how badly it would affect your operations.

Country risk assessments serve multiple purposes depending on who is conducting them:

• Market entry decisions -- Should we open a factory in Ethiopia or Kenya? What are the comparative risks?
• Insurance and compliance -- What coverage do we need? Does our duty of care program meet ISO 31030 requirements?
• Investment protection -- What is the probability of expropriation, currency controls, or contract repudiation?
• Personnel safety -- What security measures do our employees need? Do we need evacuation plans?
• Supply chain resilience -- What happens to our sourcing if a border closes or a port is blockaded?
• Board and investor reporting -- What is our aggregate country risk exposure across all operating countries?

The Six Core Risk Factors

Every credible country risk framework evaluates some version of these six categories. The weighting varies depending on the framework and the user's priorities, but the categories themselves are consistent across all major rating systems.

1. Political Risk

Political risk covers government stability, policy continuity, corruption levels, and the likelihood of abrupt regime changes that affect foreign businesses. This includes everything from election-driven policy shifts to full coups. A country can be politically "stable" in the sense that it has not had a recent coup, but still carry high political risk because of corruption, opaque bureaucracy, or arbitrary enforcement of regulations against foreign companies.

Key indicators: government effectiveness scores, corruption perception index rankings, political violence history, ruling party tenure, opposition strength, and constitutional term limit adherence. See our Political Risk Services Guide for a detailed breakdown of how these indicators are measured and which providers track them best.

2. Security Risk

Security risk covers armed conflict, terrorism, organized crime, civil unrest, and general crime levels that affect personnel safety and asset protection. This is the category that most directly impacts duty of care obligations, insurance premiums, and the physical safety of your people on the ground.

Key indicators: armed conflict intensity, terrorism incident frequency, homicide rates, kidnapping rates, protest frequency and escalation patterns, and armed group territorial control. For companies using travel risk management frameworks, security risk assessment is typically the highest-weighted factor.

3. Economic Risk

Economic risk covers currency stability, inflation, sovereign debt levels, GDP growth trajectories, and the likelihood of economic events that disrupt business operations. A currency devaluation of 30% overnight -- which happened in Nigeria, Egypt, Argentina, and Turkey in recent years -- can destroy the economics of an overseas operation in a single day.

Key indicators: inflation rate, currency volatility (30/90/365-day), sovereign credit rating, current account balance, foreign reserve adequacy, and external debt as a percentage of GDP.

4. Regulatory Risk

Regulatory risk covers rule of law, contract enforcement, foreign investment restrictions, tax regime stability, labor law complexity, and the likelihood of regulatory changes that affect profitability or operations. In many emerging markets, the written law and the enforced law are two different things.

Key indicators: World Bank Ease of Doing Business ranking (now discontinued but historical data remains useful), contract enforcement timelines, foreign ownership restrictions, capital repatriation rules, tax treaty coverage, and regulatory change frequency.

5. Infrastructure Risk

Infrastructure risk covers transportation networks, power grid reliability, telecommunications availability, port capacity, and the physical systems that your operations depend on. A factory with unreliable power loses production days. A logistics operation with one road to the port is one landslide away from a complete shutdown.

Key indicators: road network quality, power outage frequency, internet penetration and reliability, port throughput capacity, airport connectivity, and cold chain infrastructure availability.

6. Natural Hazard and Environmental Risk

Natural hazard risk covers earthquake zones, flood plains, hurricane paths, drought frequency, wildfire exposure, and pandemic vulnerability. Climate change is increasing the frequency and severity of weather-related disruptions in many operating environments. Environmental risk also includes industrial pollution, water scarcity, and environmental regulation that may restrict operations.

Key indicators: historical natural disaster frequency, seismic zone classification, flood risk maps, climate vulnerability index, water stress levels, and pandemic preparedness scores.

Major Country Risk Rating Systems Compared

Dozens of organizations publish country risk ratings. Some are freely available, some cost thousands of dollars per year, and some are embedded in larger consulting relationships. The table below compares the six most widely used systems that are relevant to mid-market companies with operational exposure in emerging markets.

Coface Country Risk Ratings

Coface is a French credit insurance company that publishes one of the most widely referenced country risk rating systems in the world. Their scale runs from A1 (lowest risk) through A2, A3, A4, B, C, D, to E (highest risk). They also publish a separate "business climate" rating on the same scale, which measures the quality of the operating environment specifically for businesses -- contract enforcement, payment behavior, and institutional quality.

Strengths: Free basic ratings, strong trade credit and payment risk focus, quarterly updates, separate business climate dimension. Weaknesses: Primarily oriented toward trade credit risk rather than physical security or personnel safety. Does not assess natural hazard risk. Updated quarterly, which is too slow for volatile situations.

Euler Hermes (Allianz Trade) Country Risk Ratings

Euler Hermes -- now branded as Allianz Trade -- publishes country risk ratings focused on trade credit, with particular depth on payment default risk, business insolvency, and economic stability. Their ratings use a tiered letter system (AA1 through D4) with more granularity than Coface.

Strengths: Granular multi-tier rating scale, strong economic and payment risk analysis, free basic access, backed by Allianz's global claims data. Weaknesses: Heavy economic and credit orientation -- limited security, political violence, or operational risk assessment. Not useful as a standalone for companies whose primary concern is personnel safety.

EIU Country Risk Service

The Economist Intelligence Unit (EIU) provides one of the most comprehensive country risk assessment products on the market. Their service includes sovereign risk, currency risk, banking sector risk, political risk, and economic structure risk -- each scored on a 0-100 scale with an overall composite. EIU reports include 5-year forecasts and scenario analysis.

Strengths: Comprehensive multi-dimensional scoring, monthly updates, forward-looking forecasts, deep analyst narratives, 180+ countries. Weaknesses: Expensive ($10K-$50K+/yr depending on coverage), primarily designed for financial institutions and sovereign debt analysts rather than operational teams. The analytical depth is excellent but may be more than a mid-market operations team needs.

PRS Group / ICRG (International Country Risk Guide)

The ICRG is the most widely cited country risk index in academic research and institutional analysis. Published by the PRS Group since 1980, it scores countries on three risk dimensions -- political (100 points), financial (50 points), and economic (50 points) -- for a composite score out of 100. The political risk component includes 12 sub-components covering government stability, socioeconomic conditions, investment profile, internal conflict, external conflict, corruption, military in politics, religious tensions, law and order, ethnic tensions, democratic accountability, and bureaucracy quality.

Strengths: The gold standard for political risk measurement, 40+ years of historical data, granular 12-component political risk breakdown, monthly updates, used by most political risk insurance underwriters. Weaknesses: The interface and data delivery feel dated compared to modern platforms. Pricing is not transparent. Does not include real-time alerting or operational security intelligence. The 12-component political risk breakdown is powerful for analysis but requires expertise to interpret for operational decisions.

World Bank Worldwide Governance Indicators (WGI)

The World Bank publishes six governance dimensions for 200+ countries: Voice and Accountability, Political Stability and Absence of Violence, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption. Each dimension is scored from -2.5 (worst) to +2.5 (best) with percentile rankings.

Strengths: Completely free, covers 200+ countries, consistent methodology over 25+ years of data, widely trusted by donors and development institutions. Weaknesses: Updated only once per year, which makes it useless for monitoring fast-moving situations. Aggregate scores mask important sub-national variation. A country can score well on "Government Effectiveness" nationally while having zero government presence in the province where your mine site is located.

Marsh Political Risk Map

Marsh McLennan publishes an annual political risk map that rates countries on a four-level scale (Low, Medium, High, Very High) across multiple risk categories including political violence, sovereign credit risk, and business environment. The map is freely available and is widely used as a quick-reference tool by risk managers and insurance buyers.

Strengths: Free, visually intuitive, backed by Marsh's political risk insurance claims data, useful for board-level communication. Weaknesses: Annual update only, four-level scale lacks granularity, does not include real-time monitoring. Best used as a starting point rather than a complete assessment.

Detailed Comparison: What Each System Actually Measures

How to Conduct Your Own Country Risk Assessment

You do not need a $200K consulting engagement to produce a credible country risk assessment. If you are a mid-market company with under $30M in revenue and 1-5 overseas locations, the following step-by-step process will give you a structured, defensible assessment that satisfies insurance requirements, board reporting, and operational planning.

Step 1: Define Your Risk Profile

Before you assess a country, define what matters to your specific operations. A solar farm in Senegal has a fundamentally different risk profile than a garment factory in Bangladesh or an NGO field office in South Sudan. Your risk profile determines how you weight the six core factors.

• What assets do you have in-country? -- People, fixed assets, inventory, intellectual property, financial instruments
• What is your operational model? -- Permanent facilities, rotating field teams, supply chain dependency only, JV partner reliance
• What is your risk tolerance? -- Can you absorb a $500K loss from a disruption? $5M? Does a 30-day shutdown kill the project?
• What are your compliance obligations? -- Duty of care laws, insurance requirements, donor reporting, ESG commitments

Step 2: Gather Baseline Data (Free Sources)

Start with freely available data to build a baseline picture. You can construct a surprisingly comprehensive initial assessment using only free sources:

1. World Bank WGI -- Six governance dimensions for your target country. Download from info.worldbank.org/governance/wgi.
2. Coface Country Risk -- Country rating and business climate rating. Available on coface.com.
3. Transparency International CPI -- Corruption Perception Index ranking. Free annual report.
4. INFORM Risk Index -- Multi-hazard risk assessment covering natural, conflict, and vulnerability dimensions. Free from drmkc.jrc.ec.europa.eu.
5. UN OCHA ReliefWeb -- Humanitarian situation reports and crisis profiles. Free at reliefweb.int.
6. ACLED -- Armed Conflict Location & Event Data. Free for most users at acleddata.com. Provides incident-level conflict data with dates, locations, and fatality counts.
7. Government travel advisories -- US State Department, UK FCDO, Australian DFAT. Free and regularly updated.

Step 3: Score Each Risk Dimension

Create a simple scoring matrix. For each of the six core risk factors, assign a score from 1 (low risk) to 5 (extreme risk) based on your baseline data. Then apply a weight based on your operational profile from Step 1.

Multiply each score by its weight and sum the results for a weighted composite score. A composite above 3.5 warrants enhanced due diligence. Above 4.0 requires active mitigation plans. Above 4.5 means you should seriously question whether the opportunity justifies the risk.

Step 4: Identify Sub-National Variations

Country-level ratings mask enormous sub-national variation. Nigeria is not one risk environment -- Lagos, Abuja, Port Harcourt, and Maiduguri are four completely different operating contexts. Kenya's Nairobi is not the same risk profile as Mandera County. Indonesia's Java is not Sulawesi or Papua.

For every country you assess, identify the specific region, province, or city where you will operate and adjust your scores accordingly. ACLED conflict data, government travel advisories (which often rate sub-national regions differently), and local news monitoring all help here.

Step 5: Document Assumptions and Scenarios

Every country risk assessment is built on assumptions. Document them explicitly. What is your assumption about the upcoming election? About the central bank's ability to defend the currency? About the continuation of a specific government policy? When those assumptions change, your assessment changes.

Build at least two scenarios beyond your baseline: a "deterioration" scenario (what if the key risk factors get 20% worse?) and a "crisis" scenario (what if the worst realistic outcome happens?). For each scenario, define your response -- at what point do you evacuate personnel, suspend operations, or activate insurance coverage?

Step 6: Layer Real-Time Intelligence

A scored assessment is a snapshot. The world changes. Layer real-time intelligence on top of your periodic assessment to catch the changes between updates. This is where services like Region Alert fit -- providing daily monitoring of local-language sources so you know when your baseline assumptions are no longer valid.

Country Risk Assessment for Specific Industries

The weighting and focus of your country risk assessment should change significantly depending on your industry. A solar farm operator and an NGO field team face fundamentally different risk profiles even when operating in the same country.

Oil & Gas Operations

Oil and gas operations carry some of the highest country risk exposure of any industry. Fixed assets worth hundreds of millions of dollars cannot be relocated. Pipelines cross hundreds of kilometers of territory that may include areas with active armed groups, community grievances, or regulatory ambiguity. Key risk priorities:

• Community relations and social license -- Pipeline sabotage, wellhead vandalism, and production blockades by local communities are among the most common operational disruptions in West Africa, the Middle East, and Central Asia
• Resource nationalism -- Government renegotiation of production-sharing agreements, windfall taxes, and forced local content requirements
• Infrastructure dependency -- Export pipeline capacity, port access, refinery throughput, and power grid reliability
• Security force dynamics -- Relationships with military and police escorts, private security oversight, and Voluntary Principles on Security and Human Rights compliance

Mining and Extraction

Mining shares many risk factors with oil and gas but adds unique challenges around remote site access, artisanal mining conflicts, and environmental liability. Key additional risk priorities:

• Artisanal and small-scale mining (ASM) conflicts -- Concession overlap with informal miners is one of the most underestimated risks in African and Asian mining
• Environmental and water rights -- Tailings dam failures, water table contamination claims, and deforestation allegations can trigger license revocations
• Transport corridor security -- Many mine sites depend on a single road or rail line to reach port. Disruption anywhere on that corridor halts production
• ESG and supply chain due diligence -- EU conflict minerals regulations, OECD Due Diligence Guidance, and customer ESG audit requirements

Solar and Renewable Energy

Renewable energy operations in emerging markets face a distinct risk profile centered on land acquisition, regulatory framework maturity, and grid integration. Key risk priorities:

• Land tenure and acquisition -- Unclear land ownership records, community claims, and government expropriation of solar sites after development
• Feed-in tariff and PPA stability -- Government renegotiation of power purchase agreements after energy prices drop
• Grid curtailment -- Transmission infrastructure inability to absorb renewable generation, leading to forced production cuts
• Currency risk on USD-denominated PPAs -- Revenue in local currency that must service USD-denominated project debt

Manufacturing

Manufacturing operations are highly sensitive to economic, regulatory, and infrastructure risk because margins are thin and supply chains are complex. Key risk priorities:

• Labor law and union activity -- Strike risk, minimum wage changes, and labor inspection enforcement patterns
• Import/export regulatory changes -- Tariff shifts, local content requirements, and customs processing delays
• Power reliability -- Unplanned outages that halt production lines, especially in countries without reliable grid infrastructure
• Currency and repatriation risk -- Ability to convert local currency profits to USD/EUR and repatriate them to the parent company

NGO and Humanitarian Operations

NGOs operate in some of the highest-risk environments on earth, often with smaller security budgets than private-sector organizations. Key risk priorities:

• Personnel security -- Kidnapping, armed robbery, carjacking, and sexual violence against field staff
• Access negotiation -- Ability to reach beneficiary populations across conflict lines, through checkpoints, and in areas controlled by non-state armed groups
• Duty of care compliance -- Donor requirements for security risk assessments, incident reporting, and staff welfare programs
• Government restrictions on NGO operations -- Registration requirements, operating permits, funding restrictions, and forced closure orders

Free vs. Paid Country Risk Tools

The question is not whether to use free or paid tools -- it is what combination of each gives you adequate coverage for your risk exposure. Here is an honest breakdown of what free tools can and cannot do, and when you need to pay for more.

The practical recommendation for mid-market companies: Start with free tools (Coface + World Bank WGI + ACLED + government travel advisories) for your baseline assessment. If you have personnel on the ground in high-risk environments, add a real-time intelligence service like Region Alert ($499/mo) for daily monitoring. If you need academic-grade political risk scoring for investor reporting, add ICRG ($7K+/yr) or EIU ($10K+/yr). Most mid-market companies with 1-5 overseas locations do not need all three layers -- the combination of free baseline data and real-time operational intelligence covers 90% of use cases.

How Often Should Country Risk Assessments Be Updated?

The short answer: more often than you think. The longer answer depends on your exposure level and the volatility of your operating environment.

The most dangerous approach is treating a country risk assessment as a one-time exercise. A company that assessed Mozambique's Cabo Delgado province in 2018 and did not reassess would have missed the insurgency that displaced 800,000 people and forced Total to evacuate its $20B LNG project in 2021. A company that assessed Myanmar in January 2021 and did not reassess would have been blindsided by the military coup on February 1.

Trigger events that should prompt an immediate reassessment include: changes of government (elected or otherwise), imposition of sanctions, currency devaluation exceeding 10%, outbreak of armed conflict, major natural disaster, pandemic declaration, and any event that causes your insurance underwriter to issue a notice.

Common Mistakes in Country Risk Assessment

After years of working with operational teams in high-risk environments, these are the most common mistakes I see in country risk assessments:

1. Treating the country as one risk environment. National-level ratings are starting points, not conclusions. The risk in Bamako is not the risk in Gao. The risk in Jakarta is not the risk in Papua. Always assess at the sub-national level.
2. Ignoring the regulatory enforcement gap. Many countries have excellent laws on paper and terrible enforcement in practice. The risk is not what the law says -- it is how the law is applied, by whom, and whether that changes when political winds shift.
3. Over-relying on a single rating system. Every rating system has blind spots. Coface does not cover security. ICRG does not cover natural hazards. World Bank data is a year old by the time you read it. Use multiple sources.
4. Failing to account for contagion risk. A crisis in one country can affect your operations in a neighboring country through refugee flows, border closures, supply chain disruptions, or regional armed group expansion. Assess the neighborhood, not just the country.
5. Static assessments in dynamic environments. An annual country risk assessment is a starting point, not a security program. If your assessment is not connected to real-time monitoring, you are managing last year's risks.

Building a Country Risk Assessment Program

If you are responsible for country risk across multiple operating locations, you need a program -- not just individual assessments. Here is the minimum viable program for a mid-market company with 1-10 overseas locations:

1. Standardized scoring template. Use the same six-factor, 1-5 scoring framework for every country so results are comparable. See the template in Step 3 above.
2. Quarterly review cadence. Calendar a quarterly review of every operating country. Update scores based on new data. Flag any country that moved more than 0.5 points in any dimension.
3. Real-time intelligence layer. Subscribe to daily intelligence for your highest-risk locations. This does not need to be expensive -- Region Alert starts at $499/month for up to 5 regions.
4. Escalation thresholds. Define what composite score triggers enhanced security measures, what score triggers evacuation planning, and what score triggers operational suspension. Write these down before you need them.
5. Annual board reporting. Produce an annual country risk summary for your board or leadership team. Use Marsh's risk map format for visual clarity, backed by your detailed scoring data.
6. Insurance alignment. Share your assessments with your insurance broker. Country risk assessments that align with your policy terms can improve coverage and reduce premiums.

For a comprehensive framework on managing travel and operational risk, see our Travel Risk Management Guide. For companies managing multiple risk categories simultaneously, our Geopolitical Risk Monitoring Platform Guide covers how to centralize monitoring across regions.