Country risk composite methodology

The country risk composite on Stonewake is an explainable 0-100 view for jurisdictions used by bank desks, built from cited public components with source attribution. Missing inputs are displayed as missing. They are never treated as evidence that a market is safe.

What the country risk composite is and is not

Country risk in official export credit is defined under the OECD Arrangement as the likelihood that a country will service its external debts, and it underpins the OECD country risk classification used for Minimum Premium Rates. That classification is published by the OECD Secretariat for Arrangement premium rules.

Stonewake's country risk composite is a separate product surface. It does not replace the OECD country risk classification, an ECA cover policy, a sovereign rating mandate, or a bank's internal country limit model. It organises cited public indicators and verified adverse news into a desk-readable composite with component-level attribution so analysts can see what entered the score.

Export finance and project finance files still need obligor commercial risk analysis beside host-country context, as set out further in country risk analysis in bank lending. Transfer and convertibility issues remain distinct perils in Arrangement country credit risk and in investment political risk insurance, including transfer risk and currency inconvertibility.

Cited components used in the composite

At capability level, the country risk composite draws on publicly named families of inputs, each retained with attribution:

• Corruption Perceptions Index material published by Transparency International
• Worldwide Governance Indicators material published by the World Bank
• FATF and EU list posture as published by those institutions
• Sovereign rating inputs as published by the rating sources used in the product
• Verified adverse news tied to the jurisdiction under the citations and evidence rules

Component weights and engineering internals are not public methodology. What is public is the acceptance posture: every scored element that appears to the customer traces to a source, and gaps stay visible.

Explainability and the 0-100 presentation

The composite presents an explainable 0-100 country risk figure across a reference of 245 jurisdictions, every published value cited. Explainability means the desk can inspect contributing components rather than receiving a black-box label. Tenant-facing displays emphasise source names and the distinction between present and missing data.

This matters when desks compare markets for buyer credit pipelines, host-country reviews on project finance files, or CRE exposures with cross-border sponsors. A composite that hides empty cells creates false precision. A composite that marks emptiness preserves second-line challenge.

Relationship to OECD Arrangement categories

Arrangement Article 22 classifies countries into eight Country Risk Categories (0 to 7). Minimum Premium Rates exist for Categories 1 through 7, not for Category 0, where country risk is treated as negligible and credit risk is predominantly obligor or guarantor risk. Classifications are monitored on an ongoing basis and reviewed at least annually, and are made public by the OECD Secretariat. After a reclassification, Participants apply premium rates at or above the new category's floor no later than five working days after the Secretariat communicates the change.

Stonewake country pages may reference the public OECD country risk classification as institutional context for EF desks. The product composite remains a Stonewake research view. It is not an official Participants classification and is never filed as one. For Arrangement mechanics, the OECD Arrangement hub and the export credit agencies hub cover the underlying rules.

Adverse news inside the country view

Jurisdiction-level adverse news enters the composite only when it meets evidence standards: stable public URL, verbatim quote, and honest labelling when verification fails. Country adverse-media screening is described further in adverse media screening. Organisation screening remains a separate workflow for named corporate counterparties, run apart from this jurisdiction-level composite.

Stonewake screening and composites are not sanctions list matching and not PEP determination. Official sanctions screening stays with the bank's designated controls.

Desk use without replacing underwriting

Typical uses of the country risk composite include:

• Framing host-country context before deeper ECA and PRI reading
• Comparing cited governance and list-posture inputs across a shortlist of markets
• Anchoring monitoring briefs to jurisdiction pages with shared citations
• Supporting credit committee packs where source trails are mandatory

It does not set country limits, does not decide cover availability, and does not substitute for ECA underwriting or internal model governance. Human analysts remain responsible for interpretation. Scores are drafts for confirmation, consistent with the product human-in-the-loop posture described in data residency and compliance.

Related hubs for desk framing: export finance, project finance, and political risk insurance.

Component refresh and classification drift

Public indicators move on their own calendars. Corruption Perceptions Index releases, Worldwide Governance Indicators updates, FATF plenary outcomes, EU list changes, and rating actions do not arrive together. The country risk composite methodology therefore emphasises attribution and visible gaps rather than a promise of perfect synchrony across every input on every day. When a component is stale or absent, the desk sees that state instead of an interpolated substitute.

OECD reclassifications under the Arrangement follow Secretariat communication rules, including the five-working-day premium adjustment window after a category change is communicated. Stonewake composites are not that official process. Desks pricing official support still watch the Participants' public classifications directly. Product country pages may surface institutional pointers, but Arrangement premium compliance remains an ECA and lender control.

Portfolio and limit-committee use

Country risk committees inside banks often maintain watchlists, limit grids, and escalation triggers. The Stonewake composite can feed the narrative annex of those discussions when citations are required. It is not intended as an unexamined numeric override of an internal model. Where CRE, EF, and PF books share a jurisdiction, a single cited profile reduces duplicated desktop research while leaving product-specific risk acceptance with each desk.

Monitoring briefs that reference a jurisdiction resolve to the same citation discipline as the composite components, which keeps the country workspace coherent when news and structural indicators arrive through different channels.