How Has the US-Israel Joint Operations in Iran Changed the ICRG Risk Ratings? And How Does the ICRG Differ from the Web ‘Scrapers’?

On February 28, 2026, the geopolitical landscape shifted as the United States and Israel launched coordinated military strikes against Iranian military and nuclear facilities. This direct confrontation, following the failure of nuclear talks in Switzerland, marks a transition from proxy warfare to a high-stakes kinetic conflict with immediate implications for global International Country Risk Guide (ICRG)scores. 

Based on political risk alone, Iran’s score began deteriorating in August of 2025, which is consistent with independent back testing on the ICRG data, notably in ‘Political Risk Spreads.’ (Bekaert, G., Harvey, C. R., Lundblad, C. T.& Siegel, S. (2014)”Political risk spreads” Journal of International Business Studies, 45(4), 471–493.)

From “Maximum Pressure” to “Major Combat Operations”

President Donald Trump has confirmed that “major combat operations” are underway, explicitly calling for regime change in Tehran. For users of PRS Group data, this shift drastically reduces Government Stability scores and increases Internal Conflict ratings as the Iranian leadership faces both external strikes and domestic unrest. 

The Multi-Front Retaliation Cycle

The conflict has immediately spilled over beyond the primary combatants:

Gulf Allies Targeted: Iran has responded by firing missiles at U.S. bases in the UAE, Qatar, Kuwait, Bahrain, and Jordan.

Aviation Disruptions: Airspace across at least eight countries has been closed, with major hubs like Dubai (Emirates) and Doha (Qatar Airways) suspending operations.

Infrastructure Stress: Strikes on Iranian command structures and retaliatory debris in Haifa and Abu Dhabi are creating a “Fiscal Stress Test” for regional insurance and reconstruction markets. 

Investor Guidance: Navigating the “Risk Premium” Era

With over eight (8) million back-tested data points, the ICRG remains the definitive source for quantifying this volatility. In the current environment:

Bullish Positions: We remain bullish on Gold, Silver, and Bitcoin as traditional currency hedges.

Bearish Outlook: The USD is expected to face volatility while regional equity markets in the Levant face significant downside risk. 

Based on the International Country Risk Guide (ICRG) framework for assessing External Conflict, the current situation between Iran and Israel in early 2026 is classified as a high-risk regional conflict. 

The ICRG’s “External Conflict” metric measures the risk to a government from foreign action, ranging from diplomatic pressure to full-scale war. Using these standards, the conflict has reached “regional” status due to the following criteria: 

Shift to Direct Interstate Warfare 

Historically a “gray zone” or proxy struggle, the 12-day kinetic war in mid-2025 marked a permanent transition to open military exchange. Under ICRG metrics, this moves the risk from “low-level cross-border friction” to “all-out war” or “state of war,” significantly lowering political risk scores for both nations. 

Multi-Front Regional Involvement

The conflict is no longer bilateral; it systematically involves multiple regional actors and territories: 

Syria: Following the fall of the Assad regime in late 2024, Syria has become a primary battlefield for “Phase 2” of the Israel-Iran conflict, with Israel and Turkey intervening to prevent Iranian proxy reconstitution.

Maritime Chokepoints: Houthi non-state actors continue to target the Red Sea and the Strait if Horrmuz, turning the bilateral tension into a regional maritime security crisis that impacts global supply chains.

Lebanon: Persistent “low-level kinetic friction” remains on the Blue Line as Israel conducts pre-emptive strikes to prevent Hezbollah from restoring its long-range missile capabilities. 

The International Country Risk Guide and PRSAi

While the real-time AI and high-frequency data scraping groups enjoy the flex of monitoring thousands of open and grey source material, they’re essentially trying to predict a heart attack by counting how many times a patient blinks. The ICRG operates on a level of structural reality that “black box” algorithms simply cannot replicate.

Here is why the ICRG remains the undisputed heavyweight while the tech-heavy newcomers are still stuck in the dashboard phase:

Signal vs. “Scraping” Noise

The new school of risk firms relies on natural language processing (NLP) to scrape news and social media. The flaw? AI is notoriously bad at distinguishing between performative political theater and structural regime shifts. The PRS Group’s expert-led methodology doesn’t get distracted by a viral hashtag or a loud protest; it focuses on deep-tier metrics like “Bureaucracy Quality” that an algorithm literally cannot “read” from a news feed.

The “Recency Bias” Trap

Predictive AI models are slaves to the “now.” They over-index on the latest headline, leading to volatile risk scores that jitter every time a politician opens their mouth. The ICRG provides the longitudinal consistency required by institutional giants like the World Bank. Because it has used the same 22-variable framework since 1980, it offers a “clean” historical baseline. High-speed tech models haven’t been around long enough to prove they can survive a full 30-year credit cycle without “re-calibrating” their math to fit the latest trend.

Institutional Weight vs. Trading Floor Fluff

When a country’s ICRG score drops, multilateral lenders and institutional investorsactually move their money. It is a functional component of global “hurdle rate” calculations. The algorithmic competitors provide interesting “sentiment dashboards” for day traders looking to scalp a few pips, but they lack the sovereign-level authority that forces a CFO to kill a multi-billion dollar infrastructure project.

Qualitative Nuance > Quantitative Volume

You can’t quantify “Corruption” or “Ethnic Tensions” just by counting word frequencies in the press. The ICRG uses human intelligence to assess the quality of institutional decay. An AI might see “increased military spending” as a boost to GDP, whereas an ICRG analyst identifies it as a precursor to the External Conflict risk currently boiling over between Iran and Israel.

Our data drives

The PRS Group

www.PRSGroup.com