CRA

Country Risk Evaluation

Country Risk Assessment: Iran

The process of Country Risk Assessment demands a full analysis of a nation's political, economic, and cultural outlook. "Country risk analysis rests on the fundamental premise that growing imbalances in economic, social, or political factors increase the risk of a shortfall in the expected return on an investment" (Meldrum 2000:1). Country Risk Assessment is a holistic process and while there is no scientific formula for assessing risk in all instances, most rating agencies consider the following six factors: economic risk, transfer risk, exchange rate risk, location or neighborhood risk, sovereign risk, and political risk (Meldrum 2000:1)

Economic risk assesses the prudency of the government's fiscal and monetary policy, taxes, and debt. Another concern is transfer risk, "the risk arising from a decision by a foreign government to restrict capital movements. Restrictions could make it difficult to repatriate profits, dividends, or capital" (Meldrum...
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