CountryRisk.io is an independent online platform for rating sovereign risk. As of July 2020, the latest version systematically integrates Environmental and Social factors into the sovereign risk model. This makes ESG sovereign risk the platform’s default rating framework.

Our platform is open to all interested members of the public, from central bankers and institutional analysts to corporations, students and private individuals. This open-door policy gives those who use the platform access to a uniform, holistic, transparent rating framework and facilitates the exchange of country risk views among our community members. 

We offer several indices for standard, ESG and anti-money laundering (AML) sovereign risk. For reference, we also include the UN Sustainable Development Goals (SDGs) Index.

Our platform also includes curated country reports and news. This enables you to simplify your workflow by searching for relevant articles within CountryRisk.io instead of using a separate search engine.

Yes, you will continue to have access to the original sovereign risk model. We’ve included an option to switch to the ESG version of the model before you begin a rating. However, if you decide you want to rate a country using the standard sovereign risk model after you’ve already started using the ESG version, you’d need to begin again. 

That said, our standard sovereign risk model has always included governance risk factors. The difference between the standard and ESG-integrated rating versions is that the latter explicitly includes environmental and social factors. 

Is the standard model for assessing sovereign and country risk still available for those who don’t want to include Governance and Social factors?

While working as country risk analysts, our founders, Jenny Asuncion and Bernhard Obenhuber, grew increasingly frustrated with credit rating agencies’ (CRA) lack of transparency and decided there must be a better way to assess sovereign risk. So, they created one. And CountryRisk.io is the result. 

Our founders were also motivated by the European sovereign debt crisis. Regulators around the world began calling on CRAs to make their methodologies more transparent and on financial institutions to reduce their dependence on CRA ratings. All of this told our founders that the time was right to put their extensive sovereign and country risk experience into building a transparent online rating platform of exceptional quality. 

CountryRisk.io was founded by Jenny Asuncion and Bernhard Obenhuber. They both have decades of experience in finance as country risk analysts, economists and investment managers. 

Patrick Kranzlmüller and Axel Swoboda are the IT wizards who brought CountryRisk.io to online life. Each remains integral to the platform’s ongoing development. 

We choose our advisors based on their areas and extent of expertise. We appointed Nicholas Turner, Elie Heriard Dubreuil and Moritz Kraemer for their competences in AML & sanctions, sovereign ESG and sovereign credit risk, respectively.

Having led Deutsche Bank’s risk, legal and compliance departments, we selected Hugo Banziger to advise on our strategy. Meanwhile, Alexandra Engel’s wealth of expertise in legal and global regulatory affairs made her an ideal choice as legal advisor.

Who are your advisors, and how were they selected?

Our founders have financed CountryRisk.io from the very beginning, and continue to do so without outside investment.

The range of people who use our platform has evolved and expanded since our founding in 2016. As such, it's no longer limited to analysts from financial institutions, such as banks, insurance companies and asset management firms, who want to perform their own independent country risk analyses. 

Today, we count economists working in central banks, finance ministries and other public offices among those who use our platform. Increasingly, consulting companies representing clients in cross-border projects, as well as debt management offices from ministries or government treasuries, are also joining our community. And, thanks to the addition of AML country risk scores to our platform, many compliance departments of financial institutions and corporations are now also getting value from our platform.

In short, anyone with a keen interest in country risk analysis is welcome to join our thriving community.

There are several ways to use CountryRisk.io:

Banks and other financial institutions use our platform to model their sovereign risk exposures and fine-tune individual country credit exposures. Similarly, banks use the AML country risk score as part of their compliance programs. 

Investment managers use CountryRisk.io to analyse sovereign risks for new and existing investments. Many investment managers also use it to construct fundamental credit and equity benchmarks.

Corporations use our platform to understand the risks involved in investing in a new market (e.g., foreign direct investment).

Finance ministries and central banks use CountryRisk.io to assess the potential impact of modifying or introducing policies --and the ensuing changes in their forecasts -- on their sovereign risk rating.

Teaching tool. Our platform is also an excellent tool for teaching applied macroeconomics at a university level.

How can members of CountryRisk.io use the platform?

Our platform is free to use. Meanwhile, our premium paid package gives you access to our sovereign, ESG sovereign and AML sovereign risk scores.

Our conviction that country risk ratings are a public good is what drove us to make our rating platform freely accessible to everyone. We also believe that a combination of multiple views on a country’s risk is superior to that of a single analyst. Requiring individuals to share their ratings analyses and datasets instead of charging a fee enables a community view to emerge. In turn, this allows all of our users—whether or not they have a premium account—to see how their own ratings compare with the community average and overall rating dispersion. 

So, even without a premium account, you will continue to have free access to our country ratings. However, if you want to keep your analysis and dataset private, you can sign up for a paid premium account.

You can find more details on our packages here.

How much does it cost to use CountryRisk.io?

Privacy is very important to us. You can find our privacy statement here.

CountryRisk.io isn’t a rating agency, and we don’t issue ratings. Instead, CountryRisk.io is an open, online ratings platform that everyone is welcome to use. The platform displays both draft and completed ratings, and are available to every member of CountryRisk.io.

We are not regulated, nor do we seek regulatory approval from the ESMA or SEC. That said, we do offer support to private sector companies in the regulatory approval process for credit risk models.

Are you a rating agency? Are you regulated by the European Securities and Markets Authority (ESMA) or the US Securities and Exchange Commission (SEC)?

Yes. With a premium account, you can decide which rating analyses and datasets you want to keep private and which to share with the CountryRisk.io community. 

Yes. With a premium account, you can share your rating analysis and datasets only with members of a defined group. 

Can I share my rating analysis with others?

You can’t adjust the public versions of the sovereign risk models to which everyone has access. However, we can build a bespoke version of the ESG or standard sovereign risk models just for you. This means that we can adjust the platform to meet your institution’s specific objectives. However, the results of a customised model may not be fully comparable with the ratings of our wider community. 

You can find our rating methodology here.

Where can I find your rating methodology?

a foreign currency (FCY) letter-grade rating and a rating outlook

a local currency (LCY) letter-grade rating and a rating outlook

a transfer and convertibility risk (T&C) rating

You can find the definition of each rating in the rating methodology section of our documentation.

What rating results does the analysis produce?

Yes, the letter grade ratings of CountryRisk.io are broadly comparable to those of these credit rating agencies.

Are CountryRisk.io ratings comparable to those of Standard & Poor’s (S&P), Moody’s or FitchRatings?

You can email us at contact@countryrisk.io

How can I provide feedback on the rating methodology?

No. We apply one rating model to all countries, regardless of economic structure, stage of development, region or size. In general, we believe that there’s no good reason to apply different models to different groups of countries. 

That said, we also believe that some indicators are not relevant to all countries, and so we exclude them where appropriate. Specifically, we exclude indicators that assess a country’s external liquidity—such as import coverage—where its currency is classified as a reserve currency or is frequently traded. This is because these countries tend to issue debt in their own currency. As such, due to the strength of their institutions and other mitigating qualities, these nations are highly unlikely to renege on their obligations. 

Do you differentiate between developed, developing and frontier countries?

We review our rating methodology annually based on inputs from external advisors and feedback from our community. However, this doesn’t necessarily mean that the model will change every year. We expect most changes to be minor, such as the addition of new or modified indicators and adjustment factors. 

How often will the rating methodology change?

No. We will decide in the future whether or not having our methodology officially audited would be valuable.

It creates a more in-depth, comprehensive picture of the country.

From a credit risk perspective, ESG factors capture the rising costs of environmental catastrophes and social instability factors that can have a significant impact on a country’s economic strength and government finances.

Why do you integrate environmental, social and governance factors into country and sovereign risk ratings?

Yes, the ESG country risk model uses the same approach as the standard model. 

Does the ESG country risk model also follow a scoring-based approach?

Each Environmental, Social and Governance section weighs 10%, yielding a combined weight of 30% in the full ESG country risk model.

What do the Environmental, Social and Governance factors weigh in the model, individually and collectively?

At CountryRisk.io, we focus on measures of a government’s ability and willingness to repay foreign currency bond obligations. In that sense, it’s a classic sovereign credit rating. The outcome is still a standard letter rating that summarises the ability and willingness of the sovereign borrower to repay its foreign and local debt obligations.

In contrast, the SDG Index measures progress towards meeting the 17 SDGs. Investment company RobecoSAM says, “By focusing on ESG factors such as ageing, competitiveness and environmental risks—which are long-term in nature—our country sustainability analysis offers a view into a country’s strengths and weaknesses that are not typically covered by rating agencies.” 

How do you interpret your results, and how do they differ from other ESG indices?

Yes. The key determinants of debt sustainability are: net wealth (i.e. debt minus public assets), new debt creation or primary deficit, nominal economic growth, inflation and the cost of servicing debt.

Net wealth: Environmental resources are an enviable source of wealth.

Primary deficit: Environmental disasters can lead to substantial costs for the government (e.g. Fukushima) that will weigh on the fiscal account and potentially lead to higher debt levels. At the same time, environmental pollution leads to higher health care costs and lower government revenues.

Economic growth: Capital growth and productivity are the key drivers of economic growth. Many of the ESG factors capture human capital and productivity (e.g. education).

Debt servicing cost: The cost of debt is a function of the factors listed above. Nevertheless, governance indicators (e.g. the rule of law) are important determinants of the risk premium. Investors will demand higher compensation for extending money to a country if (all things being equal concerning the above factors) its institutional framework is weak.

Can one look at the ESG indicators within the context of debt sustainability?

We source our data principally from the IMF, United Nations and World Bank. We also use additional data providers for specific risk factors. For instance, Notre Dame University provides data on countries’ environmental vulnerabilities, while the Fund for Peace releases information about the fragility of states measured along various dimensions.

Poor data quality and irregular data releases have been key stumbling blocks in integrating environmental and social factors into risk assessments. These issues limit the use of many of the United Nations’ Sustainable Development Goal (SDG) indicators. While patchy data are still prevalent in many areas, there is a strong international commitment—with financial resources—to improving statistics. As the principal driver of the SDGs, the United Nations operationalised the 17 goals by defining concrete targets and respective indicators. And, importantly for research, data access has become easier through API and bulk downloads.

Where do you source your data? What are the main challenges?

Integrating ESG factors adds much more granularity than you’d get from looking only at the standard country risk indicators. We find this to be especially valuable when it comes to higher-risk countries, where ESG factors give a more comprehensive picture of risk drivers. In addition, for those typically referred to as the “least developed countries”, ESG factors such as health, education and governance are even more important to future economic development.

How do the results of the ESG model differ from the standard country risk rating model?

The co-founders of CountryRisk.io believe that the existing ESG sovereign model adequately captures each sovereign’s risk of not repaying its debt obligations.

However, a credible benchmark that fully and accurately captures this risk has yet to emerge. So, in the spirit of making sovereign ratings a public good, we welcome our community’s inputs to improving the quality and robustness of our platform’s existing framework. In turn, such inputs could influence the model’s future evolution.

Another way the model could change is in how we define the timeframe in which the effects of environmental and social factors could ultimately weigh on the sovereign’s repayment capacity. Although assessing a sovereign’s rating usually accounts for an economic cycle (roughly defined as eighteen months to five years), environmental and social factors generally affect longer time periods, in part because the effects of some ESG policies take time to reveal themselves.

Therefore, social and environmental indicators may not always be compatible with traditional sovereign credit indicators. We are exploring the time element within the context of sovereign credit assessment and will adjust our analytical framework as required.

Will the ESG sovereign risk model change over time?

The ESG Index Builder lets you construct your own ESG index without the hassle of data sourcing, cleaning and aggregation—just choose from a long list of ESG indicators and let the tool crunch the numbers. The ESG Index Builder also showcases many of our competencies, from data analysis to building interactive dashboards. 

The CountryRisk.io Lab develops and tests various tools. Sometimes, we have ideas for new models and applications that we want to test with our community before we integrate them into the main platform. The Lab is open to the public, and you should regard its prototypes as not being fully production-ready. We are always eager to receive ideas for the Lab from our community. 

CountryRisk.io developed its AML sovereign risk score in 2018 following a request from a prominent Luxembourg-based insurance company, which at that time was looking for such an index. CountryRisk.io’s co-founders and IT developers then created a model and front-end prototype to showcase in Luxembourg. That model was extremely well received, especially for its comprehensive use of data, risk analysis, results and interface design. 

Of course, the model’s AML sovereign risk scores reflect a different dimension of risk to those of our traditional model (i.e. not the sovereign’s ability to repay its debt obligations). Nevertheless, our co-founders understood that the model was true to our company’s spirit of analysing sovereign risk. So, following some market research that revealed a strong demand for such a ranking of countries, we further developed the AML sovereign risk score and rolled it out for all of our community members in late 2018. 

Why did you start the AML sovereign risk score?

There are 240 jurisdictions within the AML risk score universe. 

How many countries are covered in the AML sovereign risk score?

We source data from a wide range of reputable sources. To find out more about our data sources and how we determine our scores, take a look at our methodology. 

We update our scores on a monthly basis, or on an ad-hoc basis if important new data is released.

Like the other models on the CountryRisk.io platform, we review the AML sovereign risk model annually with input from experts in the AML and sanctions field.

How often do you review and update the underlying model?

The current version doesn’t allow you to override the results. However, we are working on an updated design to allow individuals and corporate users to do so based on their own risk assessment or ranking of countries. 

For proper governance, this new version will include a process for supplying a justification for all overrides.

Can I override the AML sovereign risk score?

That depends on several factors. If you use the platform’s default dataset, or if you have your own dataset ready to upload and you know the country well, it should take around 20 to 40 minutes to complete the rating process. 

We encourage individual, public and corporate users to use their own datasets and forecasts on CountryRisk.io.

We believe that the entire community benefits from such specialised inputs, should you choose to share them.  

Can I provide my own datasets and forecasts?

No. You can only delete ratings that are still in “draft” status. 

“Draft” status allows you to continue working on the rating. You finalise the process as “completed” by adding a rating outlook and stating the key risk and mitigating factors that underlie the final rating. 

When you finalise the rating as “completed,” it becomes part of the community average and can no longer be changed.

What’s the difference between “draft” and “completed” status?

We used to require our members to provide rating and outlook rationales to complete a rating. In early 2020, we decided to make this optional, in order to allow those who don’t have time to write an extensive analysis of their rating to complete and share it with the rest of the community.

However, you should bear in mind that the rating and outlook rationales represent a verbal portrait of your rating summary, and so they should highlight the key risk factors that support your analysis. As such, they also help other users to understand your rating assessment. So, we continue to encourage our community members to share their arguments for the ratings and outlooks they assign to the countries they assess.

Why do I have to provide a rating and outlook rationale?

No. We believe that our platform’s strength lies in its holistic and transparent country risk ratings process. As such, enabling analysts to override the result would weaken our platform. If you think that the rating result is wrong, you can send us an email to tell us what the “correct” rating should be. Your feedback provides us with valuable information that will help inform future model calibration. 

As an individual user, no. If you need to keep your rating analysis or datasets private, please contact us for one of our premium packages by emailing contact@countryrisk.io.

Can I keep my analysis and datasets private?

Yes. With a premium account, you can share your rating analysis and datasets only with members of a defined group.

Can I share my rating analysis with selected user(s)?

Yes, we can build a bespoke version of the ESG sovereign risk model or standard sovereign risk model just for you. This also means that we can adjust the platform to meet your institution’s specific objectives. However, the results of a customised model may not be fully comparable with the ratings of our wider community.

Yes. On our platform, individual ratings and datasets are publicly available.

Can I view the rating analyses and datasets from other users?

We think that constructive exchanges among our community members is a crucial feature of our platform that improves everyone’s understanding of a country’s risks. So, we have implemented two feedback channels in CountryRisk.io.

First, you can comment on other users’ overall rating assessment and datasets, as well as on individual indicators and adjustment factors. If you have any questions or comments, feel free to post them. We ask only that you be friendly and constructive. 

Alternatively, you can indicate your view of the quality of another user’s rating by giving it a star grading. 

How can I provide feedback to other users on their ratings?

We calculate the CountryRisk.io community average as the simple average of all “completed” ratings for a given country during a calendar year.

CountryRisk.io is an independent online platform for rating sovereign risk.

FAQs