How do the colours on the Country Heatmap correspond to the Country Reports?
The colour coding relates to D&B country scores which are divided into seven bands ranging from DB1 (lowest risk) to DB7 (highest risk). Each band is subdivided into quartiles (a-d) with an ‘a’ designation representing slightly less risk than a ‘b’ and so on. Only the DB7 score is not divided into quartiles.
How the CIPS Risk Index works
- The CIPS Risk Index is composed of multiple unique assessments undertaken by D&B’s economics team of over 40 in-house economists, data analysts and contributors working in-field across the world. In all, 132 countries (comprising 90+% of global economic activity) are assessed across nine categories, on a monthly basis. The individual country scores are then aggregated to calculate a global supply risk score
- We use weights for each country based on the contribution each country makes to total global exports (in theory, their individual contribution to global supply chains). The trade shares are anchored to data for 2010 to facilitate consistent comparison of the index scores over time. The regional scores are done in the same way, aggregating across all countries in the region based on their contribution to total exports
CIPS Risk Index categories
D&B’s Country Insight Indicator provides a comparative, cross-country assessment of the risk of doing business in a country. The Indicator is divided into seven bands, ranging from DB1 to DB7. Each band is subdivided into quartiles (a-d), with ‘a’ representing slightly less risk than ‘b’ (and so on). Only the DB7 indicator is not divided into quartiles and sets a ceiling of highest risk.
The Indicator comprises the following nine analytical categories:
- Short-term Economic Outlook
Analyses the economy/business cycle over the next 2-8 quarters, identifying recession, recovery, growth or stagnation. Helps businesses anticipate the impact of short-term developments in the sphere of aggregate supply and demand.
- Long-term Economic Potential
Assesses long-term economic prospects over the next 5-15 years on the basis of trends in the physical environment, natural and human capital, and demographics and labour supply. Helps businesses foresee the long-term impacts on market potential of factors such as ageing, resource depletion and innovation.
- Market Potential
Covers the ability of foreign providers of goods and services to access a target country’s markets. This helps businesses understand the practical and regulatory barriers, as well as incentives and opportunities.
- FX Risk
Looks at the risk of lack of FX, significant devaluation or depreciation, or any instability of the exchange rate over the next 90-180 days. This helps businesses anticipate the pressures facing customers billed in foreign currency, or the risks if their receivables are in local currency.
- Transfer Risk
Covers the risk of existing or new regulations, requirements or other government actions preventing, delaying or burdening cross-border transactions. This helps businesses to anticipate risks related to cross-border payments arising from the regulatory environment.
- Business Environment Quality
Assesses the risks and opportunities in the business environment associated with regulations, institutions and business culture. This helps businesses assess how intangible aspects of the business environment can facilitate business operations or otherwise.
- Business Continuity
This category looks at factors that could affect the physical supply chain due to the effects of natural phenomena or other unintended consequences. This helps businesses anticipate the likely/current impacts of extreme weather, seismic activity and inadequate/improved infrastructure.
- Insecurity / Civil Disorder Risk
This covers the risk of disruption of business operations and the services of a functioning economy due to the negative effects of intentional human action on civil peace and internal/cross-border security. This helps businesses to understand the context and risk spectrum for threats arising from social and political disturbances.
- Expropriation / Nationalisation Risk
This category assesses the risk of forcible/compulsory, full/partial loss of control or ownership of assets at the hands of a sovereign government, and whether or not there is compensation or judicial redress. This helps businesses understand the country’s track record in this respect and highlights the risks posed by acts of expropriation/nationalisation.