Country risk analysis

Recent decade has witnessed increasing global financial uncertainty. Trade wars between major economies, lower oil prices and BREXIT ignited this uncertainty further and recent corona pandemic has definitely made things worse for businesses. Companies need to be careful in making financial decisions, especially when investing across the border.

One of the tool which can be used to analyse suitability of a country for investment purposes is country risk analysis. Country risk is the potentially adverse impact of a countrys environment on cash flows of Multinational Corporations. Country risk analysis can be used to monitor countries where the MNC is currently doing business. If the country risk level of a particular country begins to increase, the MNC may consider divesting its subsidiaries located there. MNCs can also use country risk analysis as a screening device to avoid conducting business in countries with excessive risk. Events that heighten country risk tend to discourage direct foreign investment in that particular country.

Choose any two countries and analyse its risk in terms of political and financial factors using the matrix approach and write a report on the same.