Although no method of assessing country risk is fool proof, by evaluating and comparing countries on the basis of some structured approach, international lenders have a base on which they can build subjective evaluations of whether to extend credit to a particular country.
Recognizing the desire of investors to have reliable information about country risk, Black Rock Investment Institute launched a new ranking of country risk in 2011.This ranking ranks countries according to the likelihood of debt default, devaluation of the currency or above-trend deflation. Foreign investors would not only be concerned about a country defaulting on the debt, but would also be concerned about a sharp loss of the foreign currency value by a high inflation or devaluation of the currency.