Country Risk Assessment Research Articles

Crisis preparedness exercise on food and feed safety for IPA beneficiaries 2024.

The European Food Safety Authority (EFSA) within the framework of the Preparatory measures for the participation of IPA beneficiaries in the European Food Safety Authority 2023-2026 will organize a total of 3 crisis preparedness training events for the IPA countries (Albania, Bosnia and Herzegovina, Kosovo,* Montenegro, North Macedonia, Serbia, Türkiye). For 2024, EFSA requested to organise a simulation exercise focused on a multi-country incident related to biological risks in products of animal origin. The overall objectives of the training were: 1) to increase IPA countries' knowledge and understanding of crisis handling concepts and of EFSA's crisis handling procedures; 2) to improve preparedness and response planning for crisis situations in the domain of biological hazards; 3) to improve coherence, interoperability and coordination, to be prepared for communication and decision-making challenges in crisis situations. Working with the contractor Opera srl, EFSA organised a 2-day training on 26-27 June 2024 in Sarajevo (Bosnia and Herzegovina), attended by 24 participants (3 online) from 7 IPA countries, 2 representatives from EFSA and 1 representative from the hosting competent authority from Bosnia and Herzegovina. Participants were briefed on the IPA crisis preparedness training scheme, EFSA's crisis handling procedures, principles of crisis communication (remote mode), EFSA - ECDC Rapid Outbreak Assessment (remote mode), food safety risk assessment structures in Bosnia and Herzegovina and Serbia. Most of the workshop was dedicated to the simulation exercise, that was organized in a tabletop format, with injects describing an evolving food safety incident and a debriefing after each inject. During the exercise, 1 audio-conference meeting and a TV debate were simulated. The exercise was concluded with a brainstorming session between the tutors and participants. Three recommendations were done to improve the organization of future events. Six recommendations were given for the improvement of risk assessment, risk management and risk communication in IPA countries. The objectives were achieved, based on the results of the knowledge test and on the feedback provided by participants in the course evaluation questionnaire.

Assessing Country Risk in the Stock Market and Economic Growth Nexus: Fresh Insights from Bootstrap Panel Causality

Investigating the nexus between the stock market and the real economy is vital, as financial markets can play a critical role in economic growth. However, the country's risk factors (political, economic and financial) influence economic growth and financial markets’ nexus. This study examines the role of stock market development and country risk (political, economic and financial) on economic growth, and the moderating influence of country risk in the stock market and economic growth nexus in BRICS economies (except Russia) over the period of 2000 to 2020. The study employed various latest econometrics techniques, including Covariate Augmented Dickey-Fuller (CADF) for identifying unit root problem, Westerlund (2007) test for examining long-run relationship, Cross-sectional auto-distributive lag (CS-ARDL) for estimating long-run relationship, and finally, Konya (2006) for identifying the causal relationship among the variables. The study explored that financial risk, economic risk and political risk is negatively associated with economic growth. However, stock market does not play a significant role in economic growth in this case. The study highlighted a bi-directional causality between economic growth and stock market development. The study also suggests a unidirectional causality from political, economic and financial risk towards economic growth. Finally, the study suggests some policy recommendations based on the empirical results.

Risk Management, Expectations and Global Finance

Abstract What impact do past experiences have on the expectation formation of banks? This article analyses the risk management of Germany’s largest bank during the 1970 and 1980s. In this period, financial deregulation and globalization increased the likelihood of credit defaults and forced banks to implement new strategies of risk assessment. The Herstatt failure of 1974 triggered a series of new regulations, partly based on initiatives of the banks themselves. After the sovereign debt crisis of the 1980s, banks introduced a comprehensive strategy of country-risk assessment. They systematically professionalized their information resources and integrated risk and liability management. Economic forecasting was often based on historical data used for the classification and diversification of risks. However, learning from past experiences had limitations, as recent events were often overrated. This had the effect that the banks’ country risk assessment focused mainly on developing countries while the industrial world was not included in the schemes. This might explain why many banks have continually underestimated the financial risks present in developed countries since the 1990s.

EBV-IgA antibody responses in endemic and nonendemic populations with nasopharyngeal carcinoma: tumour marker prognostication study and a cross-sectional study.

Nasopharyngeal carcinoma (NPC) is the most prevalent head and neck cancer in Indonesia, with 100% Epstein-Barr virus (EBV) infection in tumor cells. NPC is rare in the Netherlands. The involvement of EBV in NPC pathogenesis is reflected by early onset aberrant IgA antibody responses to various EBV proteins. Screening for elevated EBV-IgA levels is proposed for NPC risk assessment in endemic countries but is poorly studied in nonendemic regions. This study analyzed the overall diversity (immunoblot) as well as the prevalence and normalized levels of IgA responses to immunodominant peptide epitopes of EBV proteins VCA P18, EBNA 1, and Zebra (Zta) (N-terminus, P 125, P 130, full-length recombinant Zebra) in Indonesian (n=50) and Dutch (n=50) patients with NPC. The results confirmed that elevated levels of IgA-VCA P18 and IgA-EBNA 1 were found in both NPC populations, but that IgA-Zta was more variable. IgA-Zta responses were more pronounced in Indonesian NPC cases, reflecting more frequent EBV reactivation overall. IgA-VCA P18 and IgA-EBNA are independent tumor markers and are both necessary for NPC risk assessment. Overall, these results confirmed the diagnostic benefit of combined IgA-VCA P18/-EBNA 1 testing for NPC risk assessment in endemic and nonendemic populations.

Fuzzy Analytic Network Process with Principal Component Analysis to Establish a Bank Performance Model under the Assumption of Country Risk

In recent years, bank-related decision analysis has reflected a relevant research area due to key factors that affect the operating environment of banks. This study’s aim is to develop a model based on the linkages between the performance of banks and their operating context, determined by country risk. For this aim, we propose a multi-analytic methodology using fuzzy analytic network process (fuzzy-ANP) with principal component analysis (PCA) that extends existing mathematical methodologies and decision-making approaches. This method was examined in two studies. The first study focused on determining a model for country risk assessment based on the data extracted from 172 countries. Considering the first study’s scores, the second study established a bank performance model under the assumption of country risk, based on data from 496 banks. Our findings show the importance of country risk as a relevant bank performance dimension for decision makers in establishing efficient strategies with a positive impact on long-term performance. The study offers various contributions. From a mathematic methodology perspective, this research advances an original approach that integrates fuzzy-ANP with PCA, providing a consistent and unbiased framework that overcomes human judgement. From a business and economic analysis perspective, this research establishes novelty based on the performance evaluation of banks considering the operating country’s risk.

Social Trust Towards Risk in International Business: A Cross-Country Analysis

There is a growing body of research on social trust in the literature in business and economics. This study adopts the conceptual and empirical relationship between trust behaviour and risk-taking propensity, and further extends the frontier of research on social trust by examining whether social trust can influence country risk in international business settings. Using a panel data set consisting of developing and developed countries over the period 1995–2019, the study performs a battery of empirical tests, and finds robust evidence that developing countries with a higher level of social trust appear to display a greater degree of financial uncertainty. The findings are consistent with recent experimental studies documenting a significant positive association between trust and risk-taking behaviour. The study provides new insights into the role of social trust in country risk assessment, and offers meaningful implications for international business.

Microplastic contamination in processed and unprocessed sea salts from a developing country and potential risk assessment

In aquatic environments, microplastics (MPs) are pervasive which could have a considerable negative impact on the environment, organisms and pose a risk to human health. However, knowledge about the exposure and ecological risk of MPs in the coastal ecosystems of developing countries is limited. In this study, we analyzed salt samples from five commonly consumed processed and unprocessed sea salts of different commercial brands originated from 15 salt pans in Bangladesh to assess the abundance, characteristics and potential risks of MPs. The quantities of MPs in unprocessed salts (average 195 ± 56 item/kg) were higher than those in the processed salts (average 157 ± 34 item/kg). One-way analysis of variance (ANOVA) showed significant (p < 0.05) differences among the average numbers of MPs in both processed and unprocessed salts. MP levels in this study were 2–3 times higher than those reported from some other countries. Fiber-shaped and transparent MPs were dominant in both cases. MPs less than 0.5 mm in size were the most abundant in both unprocessed (58.2%) and processed (62.2%) salts. Fourier-transform infrared spectroscopy (FTIR) analysis confirmed five types of polymers, including polyethylene terephthalate (PET−35%), polypropylene (PP−27.5%), polyethylene (PE−25%), polystyrene (PS−10%), and Nylon (2.5%) in the studied salts. The sea salts were classified as potential hazard index (PHI) levels IV to V, indicating serious MP contamination, whereas potential ecological risk factor (Ei), potential ecological risk index (RI), and pollutant load index (PLI) indicated moderate levels of pollution of MPs. Domestic and municipal wastewater effluents to Bay of Bengal and fishing activities may attributed to presence of MPs in the sea salt. These findings can be used by consumers, salt industries and policy makers to reduce MPs levels during consumption, production and policymaking.

Country Risk Assessment: The Role of Social Trust

Country Risk Assessment: The Role of Social Trust

Building bridges: From the probability of a country crisis to a country risk assessment

Country risk is often misconceived, leading to misunderstanding and, consequently, misapplication. This paper aims to provide an alternative way to assess country risk, based on quantitative tools where the link between country crises, firms’ characteristics and country risk ratings are presented. This paper reviews the literature on country risk concepts and develops a theory for the impact of country risk on the real economy, in particular how the outcome, provoked by a country crisis, effects firms’ assets. A statistical model based on the probability of a crisis adjusted to firm idiosyncratic exposure to country risk is built with respect to the type of exposed asset. The proposed assumptions that country risk alone does not exist, and that country risk must be combined with the primary source of risk to be measured, are rooted in natural science concepts about vulnerability and hazard and are the essence of this paper. The model is forward looking based on the probabilities of the occurrence of countries’ crises, providing an economic foundation for the additional cost of capital that country risk represents. This methodology could provide additional help to investors and banks.

Assessment of the entry of the Moscow Exchange into the capital of the Kazakhstan Stock Exchange in the context of integration

This article an attempt was made to assess the entry of the Moscow Exchange in the capital of the Kazakhstan Stock Exchange as one of the alternative ways to enhance the country rankings of Kazakhstan and entering developing countries. For the study, methods of cognition, economic analysis and comparisons, study of documents, etc. Materials were used. An institutional approach was also applied, and in assessing country risk were used by the methods of widely well-known international rating agencies MSCI and FTSE Group. The scientific and information base was scientific publications of foreign and domestic scientists, as well as regulatory acts of Kazakhstan. Based on monitoring and analyzing existing country risk calculation methodologies, the MSCI indices, according to which the Republic of Kazakhstan in 2017 are chosen as banchmark. Awarded the «Frontier Market» rating. The key goals of cooperation and the entry of the Moscow Exchange in the capital of the Kazakhstan Stock Exchange were revealed. A qualitative and quantitative analysis of the Investor Base of the Moscow Exchange for the attractiveness of assets as a key determinant of its liquidity is carried out. It was concluded that according to the current market position, the influx of even 1% of the average monthly trading volume of retail investors on MOEX (20 billion tenge) on the KASE stock exchange market will lead to an increase in the volume of trading in KASE individuals four times.

Impact assessment of country risk on logistics performance using a Bayesian Belief Network model

PurposeThis paper aims to assess the impact of different drivers of country risk, including business environment, corruption, economic, environmental, financial, health and safety and political risks, on the country-level logistics performance.Design/methodology/approachThis study utilizes three datasets published by reputed international organizations, including the World Bank Group, AM Best and Global Risk Profile, to explore interactions among country risk drivers and the Logistics Performance Index (LPI) in a network setting. The LPI, published by the World Bank Group, is a composite measure of the country-level logistics performance. Using the three datasets, a Bayesian Belief Network (BBN) model is developed to investigate the relative importance of country risk drivers that influence logistics performance.FindingsThe results indicate a moderate to a strong correlation among individual risks and between individual risks and the LPI score. The financial risk significantly varies relative to the extreme states of the LPI score, whereas corruption risk and political risk are the most critical factors influencing the LPI score relative to their resilience and vulnerability potential, respectively.Originality/valueThis study has made two unique contributions to the literature on logistics performance assessment. First, to the best of the authors’ knowledge, this is the first study to establish associations between country risk drivers and country-level logistics performance in a probabilistic network setting. Second, a new BBN-based process has been proposed for logistics performance assessment and operationalized to help researchers and practitioners establish the relative importance of risk drivers influencing logistics performance. The key feature of the proposed process is adapting the BBN methodology to logistics performance assessment through the lens of risk analysis.

Assessing the Impact of Country Risk on the Investment Attractiveness of Russian Companies

The ability to attract foreign direct investment (FDI) is a critical success factor for the development of any participant in the local market. One of the indicators that characterize the investment attractiveness is the economic value added (EVA). It reflects the market assessment of the company's profit potential. Some EVA assessment methodologies include the country risk assessment – a factor that is beyond control. This study analyzes the impact of this indicator on the investment attractiveness of an organization. The authors estimated the economic value added for some of the largest Russian companies using methodologies that take into account the country's risk level, as well as those methodologies that do not take it into account. The calculations used adjustments for EVA in line with specific features of Russian accounting. As a result, it was revealed that, regardless of industry affiliation, the investment attractiveness of Russian organizations decreases when the country's risk factor is included in its assessment.The article justifies the relevance of the developed approach to the assessment of investment attractiveness of companies based on country risk level as a factor that impacts the ability of organizations to generate profit, making it possible to detect hidden management problems. According to the authors, the application of this approach not only contributes to the solution of long-term and medium-term tasks of business development (for example, the creation of its infrastructure) but also greatly facilitates the entry of organizations into international markets.One of the authors' conclusions of the study is that using the methodological tools developed by them for analytical purposes requires improving the management of the investment attractiveness of an organization and, consequently, its objective assessment. The structure of economic value added can serve as a basis for making management decisions related to increasing investment attractiveness. According to the authors, the provisions formulated in the article can serve as a methodological guide for organizing business valuation based on the EVA in the Russian context. Results of the study can be of interest to managers, current owners of companies, and potential investors.

The Impact of Institutional Environment on Risk Assessment

The purpose of this research is to investigate the relationship between the institutional environment of the studied countries and the Coface Country Risk Assessment. To meet this object, we used quantitative methods in the form of descriptive and regression analysis. The result was an evaluation of the actual Coface Country Risk Assessment and its value prediction for chosen countries. The authors quantified the impact of the institutional environment using The Heritage Index of Economic Freedom subindexes on the risk assessment indicator of the major private insurance company Coface, which is not so often used in the scientific sphere and is regularly updated. The results suggest a positive correlation between the Coface Country Risk Assessment and Government Integrity, Fiscal Health, Financial Freedom and Property Rights. Although Tax Burden is a statistically significant factor, its parameter was detected with an unexpected sign. For this reason, authors abstracted from it. Subindexes Government Spending, Business Freedom, Monetary Freedom, Trade Freedom, and Investment Freedom were statistically insignificant. Control variable Public Debt as a share of gross domestic product was insignificant as well. Implications for Central European audience: The article applies the Coface Country Risk Assessment, which has so far been rarely used in the scientific literature. We present the current and predicted values of the Central European Countries, but also the countries interesting from their point of view due to trade and investment opportunities. Many countries, including those in Central Europe, show differences between actual and predicted values.

Abstract 879: Validation of the Nigerian Breast Cancer Study model for predicting individual breast cancer risk in Cameroon and Uganda

Abstract Background: Women of African ancestry across the diaspora have low risk of developing breast cancer compared to women of European ancestry. However, they suffer the highest mortality rates because of the disproportionate burden of young onset aggressive hormone receptor negative breast cancer. To implement strategies for early detection and prevention, it is critically important to develop better risk assessment tools. The Nigerian Breast Cancer Study (NBCS) model is a new risk assessment tool developed for the individual estimation of absolute risk of invasive breast cancer in Nigeria. Its applicability outside of Nigeria remains uncertain as it has not been validated in other Sub-Sahara African (SSA) populations. Methods: We conducted a case-control study among women with breast cancer and controls ascertained in Cameroon and Uganda from 2011 to 2016. Structured questionnaire interviews were performed to collect demographic and reproductive characteristics. The NBCS model, the Gail model for white population, the Gail model for Black population (CARE), and the Black Women's Health Study (BWHS) model were applied to the Cameroon and Uganda samples separately. Local incidence rates were incorporated into the NBCS model for the Uganda analysis. Receiver-Operating Characteristic (ROC) analyses were performed and the area under ROC curve was used to indicate discriminating capacity. Results: The cohort included 549 cases (mean age 47 ± 11.94) and 509 Controls (mean age 46 ± 11.68). Compared to the other three models, the NBCS model performed best in both countries. The discriminating accuracy of the NBCS model in Cameroon (age-adjusted C-index = 0.599, 95% CI 0.540-0.658) was significantly better than in Uganda (age-adjusted C-index = 0.511, 95% CI, 0.437-0.585). In Cameroon, the BWHS model had slightly lower distinguishing ability (age-adjusted C-index = 0.588, 95% CI, 0.528-0.647) and gave lower risk estimates in cases than the NBCS model. The Gail and CARE models performed poorly in both countries. Conclusions: These findings demonstrate the potential clinical utility of the NBCS model for risk assessment in Cameroon. All currently available models performed poorly in Uganda, which suggests that the NBCS model may need further calibration before use in other regions of Africa. Differences in risk profiles across the African diaspora underscores the need for larger studies and may require development of country or region-specific risk assessment tools for breast cancer. Citation Format: Kevin Ashi, Paul Ndom, Antony Gakwaya, Timothy Makumbi, Olufunmilayo I. Olopade, Dezheng Huo. Validation of the Nigerian Breast Cancer Study model for predicting individual breast cancer risk in Cameroon and Uganda [abstract]. In: Proceedings of the American Association for Cancer Research Annual Meeting 2021; 2021 Apr 10-15 and May 17-21. Philadelphia (PA): AACR; Cancer Res 2021;81(13_Suppl):Abstract nr 879.

COVID-19 Pandemic Initial Effects on the Idiosyncratic Risk in Latin America

This work aims to estimate the idiosyncratic risk of Latin American economies and emerging economies using heteroscedastic conditional models to verify the impact of the Covid-19 pandemic on the risk associated with productive projects. The methodology used is based on the portfolio theory to estimate the idiosyncratic risk. The results highlight that Latin American economies are more susceptible to sanitary crises, such as the current pandemic, than emerging economies. The inability of emerging countries to generate the necessary savings to provide for their development imposes the need to attract resources for project financing and investment. Thus, determining the specific risk of Latin American countries is fundamental for international investors giving them another parameter when deciding on investment or financing on the continent. Originally, this work demonstrates how the sanitary crisis deriving from the Covid-19 pandemic affected the idiosyncratic or specific risk of Latin American economies using their capital market indicators. This study contributes to the assessment of Latin American economies specific risk or country risk at the beginning of the pandemic.

How to Assess Country Risk

How to Assess Country Risk

Understanding country risk assessment: a historical review

ABSTRACT Country risk reflects a country’s overall risk status, and it has an extremely important impact on global investment and trade between countries. This study is conducted to examine country risk analysis and assessment models. The historical stages of country risk assessment are characterized, and the development and application of country risk analysis and assessment techniques are reviewed. Country risk assessment modelling techniques developed in two major frameworks: Multi-criteria decision-making framework based on macroeconomic fundamentals and asset pricing framework based on market information. Based on our analysis, we identify current trends and research gaps, as well as relevant future research directions.

Black swans, extreme risks, and the e-pile model of self-organized criticality

A new model of self-organized criticality (SOC) is described which differs from ordinary sand-pile SOC models in that it uses electrically charged particles of different kinds to propagate activities and to generate the critical state. The model, arguably called the e-pile model (as an alternative to sand-pile, with “e-” standing for “electric charge”), is motivated by the problem of dielectric relaxation in self-asembling random lattices with disorder under the action of electrostatic forces, but in principle it may be applied to different SOC processes with the random injection scheme and charitable lattice-redistribution rule. We show that the critical state is that of self-evolving random percolation clusters at the edge of percolation and is also different from known “self-organized” versions of the percolation problem based on the directed percolation. A set of critical exponents is obtained based on the random walks, using the Kramers-Kronig relation and the formalism of frequency-dependent complex conductivity. The relaxation of a supercritical system to SOC is shown to obey the Mittag-Leffler pattern and fractional relaxation equation, with a broad distribution of durations of relaxation events. A peculiar feature of the e-pile system is that it is characterized by an intrinsic bias disregarding a vast majority of incipient relaxation events (by killing them “in their egg”), while it also favors other events that may, then, grow into extremely large sizes. We use this observation to explain the phenomenon of the “black swan,” by which one means a family of rare, large events, whose sudden occurrence is very difficult to predict, despite the important impact this type of event may have over the entire system. The event-size distribution of the black swans is found to be a power law, with the drop-off exponent being sensitive to the complexity features of the underlying percolation clusters. On the basis of this observation, we show that the black swans are less probable in more complex environments, and we use this argument to explain why driven, dissipative systems would develop complex structures as a result of dynamical evolution. The e-pile model reveals the upper critical dimension dc=6 for which a crossover to mean-field SOC is found. In six and higher dimensions, the probability density to observe a black swan of a given size behaves as the inverse cube of the size. Below dc the decay is always slower than the inverse-cube and is flatter at lower dimensions. The implications of the mean-field law in country risk assessment, business, and finance are discussed. Finally, we show that the occurrence of the power-law tails is limited to the rate of the driving, and that for too high a rate a different branch of extreme events may result, with the defining features enabling to associate this branch with the phenomenon of dragon kings.

Analytical Approach to Quantitative Country Risk Assessment for the Belt and Road Initiative

In recent years, the “Belt and Road Initiative” (BRI) promoted by the Chinese government has attracted a significant amount of international trade and transnational investment and other businesses. Accordingly, country risk assessment should be granted priority in the decision-making process for these projects. Based on a comprehensive consideration of important relevant countries and the availability of data of countries along the BRI, this paper uses data from 49 countries along the BRI between 2014–2019 and establishes a national risk-evaluation system for the BRI from four dimensions (i.e., political, economic, social, and investment). This paper adopts the Grey correlation analysis based on the Technique for Order Preference by Similarity to Ideal Solution (Grey-TOPSIS) method to identify and evaluate the risk of countries along the BRI. Geographic Information System (GIS) maps are drawn according to the criteria for classifying the five risk levels to show the rank of the four aspects of risk scores along the BRI in 2019 and the rank of overall country risk scores during the period 2014–2019. The proposed conclusion and policy implications can help the Chinese government and companies to make informed decisions and minimize potential risks.

COVID-19 in the WHO African region: using risk assessment to inform decisions on public health and social measures.

Successive waves of COVID-19 transmission have led to exponential increases in new infections globally. In this study, we have applied a decision-making tool to assess the risk of continuing transmission to inform decisions on tailored public health and social measures (PHSM) using data on cases and deaths reported by Member States to the WHO Regional Office for Africa as of 31 December 2020. Transmission classification and health system capacity were used to assess the risk level of each country to guide implementation and adjustments to PHSM. Two countries out of 46 assessed met the criteria for sporadic transmission, one for clusters of cases, and 43 (93.5%) for community transmission (CT) including three with uncontrolled disease incidence (Eswatini, Namibia and South Africa). Health system response's capacities were assessed as adequate in two countries (4.3%), moderate in 13 countries (28.3%) and limited in 31 countries (64.4%). The risk level, calculated as a combination of transmission classification and health system response's capacities, was assessed at level 0 in one country (2.1%), level 1 in two countries (4.3%), level 2 in 11 countries (23.9%) and level 3 in 32 (69.6%) countries. The scale of severity ranged from 0 to 4, with 0 the lowest. CT coupled with limited response capacity resulted in a level 3 risk assessment in most countries. Countries at level 3 should be considered as priority focus for additional assistance, in order to prevent the risk rising to level 4, which may necessitate enforcing hard and costly lockdown measures. The large number of countries at level 3 indicates the need for an effective risk management system to be used as a basis for adjusting PHSM at national and sub-national levels.