After consolidating the probabilities of all three regimes, the model converts these numbers into letter grades (on a scale from A+ to D-) for three investment areas:
- Financial transfers (e.g., banking and lending)
- Exports to the host country market
- Foreign direct investment (e.g. retail, manufacturing, mining)
Although PRS’ assessments focus on these separate categories of risk, the underlying risk values can be used to calculate a general rating for each country. Users can customize the PRS forecasting model to individual projects or the particular exposures of a firm by adjusting the weighting attached to each of the variables, adding or subtracting variables, or otherwise tailoring the model to emphasize specific potential sources of risk.
PRS Country Reports forecast the risk of doing business in 100 Country Reports. PRS fully revises each of the 100 reports annually, and issues updates throughout the year as political events dictate in each country. Each report includes comments and analysis on recent events, profiles of key political players, and detailed forecast scenarios, as well as basic historical background and data on the government, political entities, the environment, and the economy.
Several of the key metrics we monitor in our risk models for both the International Country Risk Guide (ICRG) and Political Risk Services (PRS) Country Reports are a government’s budget balances
“I have used PRS’ International Country Risk Guide index on over a dozen scientific publications [and] found…a significant ability of the PRS political risk indicator to predict realized political risk…”
Campbell R. Harvey