Country Risk Management

Appendix C: Social, Political, and Legal Climate

The analysis of country risk should also take into consideration the country’s social, political, and legal climate including:

The country’s natural and human resource potential.
The willingness and ability of the government to recognize economic or budgetary problems and implement appropriate remedial action.
The degree to which political or regional factionalism or armed conflicts are adversely affecting government of the country.
Any trends toward government-imposed price, interest rate, or exchange controls.
The degree to which the country’s legal system can be relied upon to fairly protect the interests of foreign creditors and investors.
The accounting standards in the country and the reliability and transparency of financial information.
The extent to which the country’s laws and government policies protect parties in electronic transactions and promote the development of technology in a safe and sound manner.
The extent to which government policies promote the effective management of the institution’s exposures.
The level of adherence to international legal and business practice standards.