Political Risk Services (PRS)

The IMF Executive Board
Policy Paper, January 2014

Political Risk Services (PRS) not only measures political risk… We forecast it. Accurately!

Political regimes and their policies towards business and investment can be forecasted.

These forecasts can be used to obtain a reliable measure of political risk.


The PRS model is the original system for forecasting and quantifying political and country risk. Back-tested for accuracy and practical relevance by scholars at the Fuqua School of Business and the National Bureau of Economic Research, this reliable model provides three regime probability forecasts over an 18-month and five-year time horizon for 100 countries.

The model also examines and rates the risk to foreign assets for each regime, including: general turmoil, restrictions on transfers (e.g. exchange controls), direct investment risk (e.g. regulatory constraints) and export barriers (e.g. tariffs).

A Reliable, Proprietary Model

The probabilities of all three regimes are consolidated and converted into clear letter grades (on a scale from A+ to D-) for three investment areas:

  • Financial transfers (e.g., banking and lending)
  • Foreign direct investment (e.g., retail, manufacturing, mining)
  • Exports to the host country.

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.

Customization is Key

Clients are able to tailor the PRS forecasting model to individual investments or particular county exposures by adjusting the weighting attached to each of the variables, adding or reducing risk metrics, or otherwise tailoring the model to emphasize specific potential sources of risk. If required, PRS provides client assistance.

Our Coverage is Exhaustive

PRS fully revises each of the 100 country reports annually, and issues updates throughout the year. Along with the forecasts, each country report includes an analysis of the main drivers of risk, profiles of key political players, and historical data on the government, political entities, the economy.

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