Country Risk Rating: A More Sophisticated Approach

One of the areas of risk which is traditionally assessed is that of geography or country risk. The UK Bribery Act Guidance defines country risk as:

Country risk: this is evidenced by perceived high levels of corruption, an absence of effectively implemented anti-bribery legislation and a failure of the foreign government, media, local business community and civil society effectively to promote transparent procurement and investment policies.

This definition would seem to call for more than an analysis of whether countries are perceived as “the usual suspects” when it comes to risk. Most compliance practitioners to date have used the Transparency International Corruptions Perceptions Index to assess country risk. The Corruptions Perceptions Index, as defined by Transparency International, “ranks more than 150 countries in terms of perceived levels of corruption, as determined by expert assessments and opinion surveys.” However, the guidance for best practices, as set forth in the most recent Bribery Act Guidance the concept of ‘compliance convergence’ and the recent Deferred Prosecution Agreements (DPAs) entered into by the US Department of Justice (DOJ), would seem to indicate that a more robust risk assessment should be utilized regarding the corruption and compliance risks of individual controls.