· political risk which can occur in the domestic and international situation and which means that any actions taken by governments which interfere with that particular country's ability to pay its international loans, and;
             · country risk which means a country is not able to generate enough foreign exchange to pay its debts (Bourke,1990).
             As a country risk analyst, index or ratings provider it is important to amalgamate a range of qualitative and quantitative information into a single rating or index. Typically, a monthly compilation of data on a variety of political, financial and economic risk factors results in the calculation of risk indices in each of these categories as well as a composite risk index. An example is that five financial, thirteen political and six economic factors could be used. Each factor would be assigned a numerical rating within a specified range. The specified allowable range for each factor would reflect the weight attributed to that factor. A higher score would indicate lower risk.
             Political risk assessment scores would be based on subjective analysis of available information. Economic risk assessment would be based on objective analysis of quantitative data and financial risk assessment scores would be based on analysis of a mix of quantitative and qualitative information. Calculation of the three individual indices would be a matter of summing up the point scores for each factor within each risk category. The composite rating is a linear combination of the three individual indices' point scores. An interesting point to note is that with a lot of providers the political risk measure is given twice the weight of financial and economic risk. This is because many providers of country risk analysis think of country risk as being comprised of two primary components: ability to pay and willingness to pay. Political risk is associated with a willingness to pay while financial and economic risk...