Country Risk in Investment

Subject : Economy

Section: Capital Market

Concept :

Investment outside India should not be considered to generate higher returns, but to reduce the adverse impact of country risk.

Country Risk

Country risk refers to the economic, social, and political conditions and events in a foreign country that may adversely affect a financial institution’s operations.
Banks must institute adequate systems and controls to manage the inherent risks in their international activities.
Country risk, also refers to the risk of investing or lending in a country, arising from possible modifications in the business environment that may unfavourably affect operating profits or the value of assets in the country.
Country risk covers factors to influence the default risk of the country resulting from economic deterioration, political events, currency depreciation and so on.