Country of risk

Country of risk is the specific country where an investment is located or where a company operates, representing the potential risks associated with investing in that particular country. These risks can include political instability, economic uncertainty, currency fluctuations, regulatory changes, and other factors that may impact the investment's performance. 

While it is important for investors to identify a single country classification for issuers, the globalization of companies’ business operations is making it increasingly difficult.

Country of risk is determined by analyzing four country factors:

• Top revenue – Country with the highest geographical revenue exposure 
• Country of Incorporation – Country in which a company is legally registered
• Headquarters Location – Generally the company’s location of management
• Primary Exchange – The main stock exchange on which a company is bought or sold, generally the location of investors

Companies may incorporate in a country other than their country of headquarters or primary exchange to take advantage oflegal benefits and corporate or dividend taxations. The country of risk will be the highest disclosed country of revenue exposure.

In general, subsidiaries and Special Purpose Vehicles (SPV) inherit the parent company's country of risk.