How do you assess country risk for an investment?
Country risk is the chance that a country's politics, security, economy, public finances or climate damage an investment. Score each dimension from free official data: the World Bank's Worldwide Governance Indicators, updated through 2025 (World Bank WDI release note, October 2026), IMF country reports, and conflict data from UCDP and ACLED.
What is country risk?
Country risk covers everything about a place that can hurt returns, independent of the company you invest in. Analysts usually combine numbers, such as debt levels, with judgement about political stability (Ryan O'Connell Finance, country risk analysis). Sovereign credit ratings are a common shortcut, but they measure a government's ability to repay and miss much of what matters to a company operating on the ground.
The same country can be low risk for one investment and high risk for another. A holder of local government bonds cares most about public finances and the currency. A company building a plant cares about security, courts, permits and floods.
Which dimensions should you score?
Score 5 dimensions separately before you combine them, so a single bad number cannot hide behind good ones.
| Dimension | Question it answers | Free source, as of October 2026 |
|---|---|---|
| Political and governance | Are institutions stable, effective and clean? | World Bank Worldwide Governance Indicators |
| Security and conflict | Is there organised violence, and where? | UCDP datasets, ACLED |
| Economic | Is growth, inflation and the external balance sound? | IMF World Economic Outlook databases |
| Sovereign credit and policy | Can the state pay its debts, and what does the IMF think of its policies? | IMF Article IV reports |
| Climate | How exposed is the country, and how ready to adapt? | ND-GAIN Country Index |
Sanctions are a separate yes or no test on the counterparties, set out in how to check if a company is sanctioned.
Step 1. Define what you are exposed to
Write down the asset, the currency, the time horizon and the way you could lose money: default, expropriation, damage, blocked payments or a collapse in demand. This decides the weights. A 10-year infrastructure stake should weight security and the rule of law heavily; a 6-month trade receivable should weight payments and the currency.
Step 2. Score governance with the Worldwide Governance Indicators
The World Bank's indicators report 6 dimensions: voice and accountability, political stability, government effectiveness, regulatory quality, rule of law and control of corruption, for over 200 economies (World Bank WGI). They aggregate 35 data sources, including household and firm surveys and expert assessments. The 2025 methodology revision moved the scores to an absolute 0 to 100 scale anchored by fixed benchmark countries (WGI 2025 methodology revision).
Look at the trend over 5 to 10 years, not only the latest score. Read the political stability and rule of law scores first; for most direct investments they matter most.
Step 3. Check security and conflict data
The Uppsala Conflict Data Program offers its datasets on organised violence free, and its Georeferenced Event Dataset downloads need no registration (UCDP GED codebook, version 25.1). ACLED records political violence and protest events; in 2026 its download page asks users to create a myACLED account, and access terms depend on use (ACLED, download data).
Map events against your actual sites, ports and routes. A national score can look calm while one province is at war.
Step 4. Read the IMF's view of the economy and public finances
The IMF holds Article IV consultations with member countries, usually once a year: a staff team visits, collects economic and financial data and discusses policies with officials, then reports to the Executive Board (IMF, Article IV staff reports). Read the staff appraisal and the debt sustainability analysis. Some smaller members move to a 24-month cycle.
The IMF's World Economic Outlook database is published each April and October, covers national accounts, inflation, unemployment, the balance of payments and fiscal indicators from 1980, and projects most series 5 years ahead (IMF WEO databases). Use it to compare debt, deficits and the current account against peers.
Step 5. Add climate exposure
The ND-GAIN Country Index is a free, open-source index of a country's vulnerability to climate change and its readiness to adapt. It covers more than 180 countries using 36 vulnerability indicators across food, water, health, ecosystems, habitat and infrastructure, and 9 readiness indicators (ND-GAIN indicators). Physical assets in low-readiness countries need the closest look.
Step 6. Combine, weight and set tripwires
Turn each dimension into a score on one scale, apply the weights from Step 1 and record why you chose them. Commercial indices do the same with fixed weights; one long-running index rates political risk on a 100-point scale and financial and economic risk on 50-point scales (Ryan O'Connell Finance, country risk analysis).
Then write tripwires: the specific events that would change your view, such as a missed IMF review, an election result or a jump in conflict events near your site. Review governance and IMF data when they update, and conflict data far more often.
Where does Tamarly Intelligence help?
Tamarly Intelligence is Tamarly's research platform on companies, funds, countries and markets, built from official filings and open data. Its Risk Atlas scores 214 of 218 countries every week and publishes daily country briefs, built from free and open data only, and every figure links to the record it came from. Funds pages show country exposure for 2,696 funds, which links country risk back to what you own.
On Level 3, Predictive Insights publishes scenario cards with a likelihood band, never a point probability, along with drivers, evidence against and tripwires. Tamarly does not cover 4 of the 218 countries in its Atlas scores, has no market prices and does not model currency or bond returns. For company-level checks inside a country, see how to research a private company.
See weekly risk scores for 214 countries, free for 7 days
Frequently asked questions
What are the main types of country risk?
Political and governance risk, security and conflict risk, economic risk, sovereign credit risk and climate risk. Score them separately, then weight them by what you own, because a bondholder and a plant owner face different risks in the same country.
Where can I find free country risk data?
The World Bank's Worldwide Governance Indicators, the IMF's Article IV reports and World Economic Outlook database, UCDP conflict data and the ND-GAIN Country Index are free (World Bank WGI). ACLED asks users to register for an account before downloading.
How often should you review country risk?
At least when the main sources update: the IMF's World Economic Outlook database each April and October and the governance indicators once a year (IMF WEO databases). Check conflict data and news weekly or more often for countries where you have physical assets.
About the author. Melvine Manchau is the founder of Tamarly and author of the Tamarly Newsletter. He previously worked at PwC, Salesforce, BlackRock/eFront and Lazard.
About Tamarly Research. Tamarly Research is part of Tamarly Media, which holds no investment positions. Tamarly is a New York research house that studies how AI is changing regulated institutions.