Country Risk Models| What is Country Risk?| What is Sovereign Risk?|FRM Live Training Sessions Video Lecture | Risk Management: An Essential Training - Management

simply learn your pace your place
financial risk manager frm Bob one of
the frm exam covers the fundamental
tools and techniques used in risk
management and the theories that
underlie their use country risk models
hello candidates welcome back today our
session is on country risk it focuses on
the risk associated on investing in a
country country risk modeling is
challenging due to the complex
relationships among the relevant
variables and the lack of reliable and
timely data we will be discussing the
various models associated with country
risk agenda our discussion begins with
the introduction of country risk we will
discuss the major risk factors that are
relevant for sovereign risk analysis our
emphasis will also be on the corporate
and sovereign default rates the
challenges of country risk and then
managing those challenges country risk
country risk refers to the possibility
or risk that a foreign burro may be
unable or unwilling to fulfill his
foreign obligations to two countries
specific conditions which may be
underlying economic political social
natural occurrences or other events and
trends a wide variety of factors may
prevent borrowers from a given country
from fulfilling their foreign
obligations these may include the
consequences of exchange control
currency devaluation official government
actions or important socio-political
changes in the borrowing country largely
unpredictable events such as natural
disasters or external stocks arising
from global phenomena such as the
consequences of World Trade Organization
WTO rulings or an oil price rise
transfer risk is one facet of country
risk and refers more narrowly to the
risk associated with the availability of
foreign currency to service a country's
external debt it also relates to the
impact of the evaluation and other
factors that affect the overall
availability of foreign exchange and
hence a borrower's ability to honor his
obligations abroad including a foreign
authority placing restrictions on
transfers
sovereign risk sovereign risk is the
risk that a foreign central bank will
alter its foreign exchange regulations
thereby sick