Country Risk Score

Country Risk Scoring Methodology

The country risk assessment provides a comprehensive evaluation of jurisdictions based on their regulatory compliance, financial crime risks, and governance standards. This systematic approach helps organisations make informed decisions about international operations and compliance requirements.

What is a Country Risk Score?

A country risk score is a quantitative indicator that evaluates the potential risks associated with conducting business in different jurisdictions. The methodology focusses on key areas including anti-money laundering compliance, sanctions exposure, corruption levels, and regulatory effectiveness to provide a holistic view of country-specific risks.

How We Calculate Country Risk Scores

The scoring methodology combines critical risk categories, each weighted according to its significance in determining overall country risk:
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Money Laundering and Terrorist Financing Risks

‍This forms the largest component of the assessment, incorporating multiple authoritative sources including FATF evaluations, mutual evaluation reports, and US State Department assessments. Jurisdictions are evaluated based on their compliance with international AML standards, effectiveness of their regulatory frameworks, and any identified deficiencies or concerns.
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International Sanctions Exposure
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The assessment considers sanctions imposed by major international bodies including the United Nations, United States Treasury (OFAC), and European Union. Countries subject to comprehensive sanctions receive lower scores, whilst those with limited or sectoral sanctions are evaluated based on the scope and severity of restrictions.

Corruption and Governance Risks

‍The assessment incorporates recognised international indices including Transparency International's Corruption Perception Index and the World Bank's Governance Indicators. Multiple dimensions of governance are evaluated including rule of law, regulatory quality, government effectiveness, and political stability.

Specialised Risk Categories

The methodology also considers specific risk factors including narcotics-related activities based on US Presidential Determinations, human trafficking risks according to State Department assessments, tax transparency issues reflected in EU blacklists, and offshore finance centre designations.

Methodology Features

Regular Updates: The scores are updated regularly to reflect changing risk environments, with some indicators refreshed quarterly and others annually as new assessments become available.

‍Authoritative Sources: The methodology relies exclusively on official government assessments, international organisation evaluations, and recognised multilateral body determinations to ensure accuracy and credibility.

‍Weighted Approach: Each risk category is weighted according to its relative importance in determining overall country risk, with money laundering and sanctions risks receiving the highest weightings.

‍Standardised Scoring: The methodology applies consistent scoring criteria across all jurisdictions, enabling meaningful comparisons and trend analysis over time.

Country Risk Table