Country Risk Reports and Their Limits

globeFor a recent project I took an in-depth look at risk factors in a number of emerging economies, including political, economic, financial, environmental, and regional risks.

A number of firms – such as A.M Best, The Economist Intelligence Unit, BMI Research/Fitch, IHS, and others – offer free or fee-based reports. Some even provide risk scores or ratings that can be compared across countries or over time.

It is important to source a variety of reports to compare and contrast the analysis and methodologies in order to get a complete picture, but as Professor Aswath Damodaran noted in a recent blog post, these reports offer non-market, point-in-time measures that may miss crucial, dynamic information and developments:

There are two problems with non-market measures like risk scores or sovereign ratings. The first is that they are neither intuitive nor standardized. Thus, a PRS [Political Risk Services] score of 80 does not make a country twice as safe as one with a PRS score of 40. In fact, there are other services that measure country risk scores, where high numbers indicate high risk, reversing the PRS scoring. The second is that these non-market measures are static. Much as risk measurement services and ratings agencies try, they cannot keep up with the pace of real world developments. Thus, while markets reacted almost instantaneously to Brexit by knocking down the value of the British Pound and scaling down stock prices around the globe, changes in risk scores and ratings happened (if at all) more slowly.

For my report, I included some recent market measures as well as news items in order to round out the picture, but it is critical to always be explicit about what elements remain outside the scope of research reports.

Quick Tip Tuesday: International Newspapers

I recently came across Newspaper Map, an interactive map of over 10,000 news outlets from around the world. Each pin links to the homepage of a news outlet, and provides links to Google translations in various languages (Chrome will also provide an option to translate the site). Digitized historical newspapers are also available by clicking “hist.,” though these are limited.

Quick Tip Tuesday: Company Extensions

If you do any kind of research on foreign companies, it’s imperative to know how the companies are structured. Canadian businesses fall into one of four categories — sole proprietorship, partnership, corporation, or cooperative — and corporations usually carry the designation Inc., Corp., or Ltd.

For foreign companies, there’s an array of other designations and extensions. This page provides a list of these extensions and explains what the terms mean and where they are used. The list also helps narrow your search if you don’t know what country a company is based in.

Quick Tip Tuesday: International Investigative Research

For international due diligence and investigative research, I’ve found Investigative Dashboard to be a wonderful resource:

Investigative Dashboard (ID) has been developed by the Organized Crime and Corruption Reporting Project (OCCRP), the world’s leading cross border investigative reporting organization. OCCRP designed Investigative Dashboard as a transnational collaborative effort to help journalists and civil society researchers expose organized crime and corruption around the world. It hosts three core tools: a crowd-sourced database of information and documents on persons of interest and their business connections, a worldwide list of online databases and business registries, and a research desk where journalists can go for help in sourcing hard to find information.

The collection of business registries and related databases is terrifically useful.

UK Investigative Research Resources

FreePint, an excellent site for research and information management resources, news, and reviews, runs a regular feature called “My Favourite Tipples,” usually written by a practitioner with expertise in a particular research niche. The latest post is by Neil Smith, a UK investigative researcher, who identifies a few indispensable tools for open source intelligence research and backgrounding individuals. The post, as well as his website, are well worth taking a look at, especially for UK sources.