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Welcome to Risk Advisory’s Corruption Challenges Index 2018, our second edition. Like our first survey, this draws on our direct experience of working in the world’s most challenging countries, revealing the markets that pose the most – and the fewest – corruption challenges for foreign investors. We have evaluated various factors – local corruption threat, foreign investors’ exposure, the level of FCPA enforcement action – and have refracted these through the prism of accessibility and availability of information when carrying out investigative research.
The countries that pose the greatest challenges are not necessarily bad places to do business: for some countries and sectors, the higher the risk, the greater the reward. But an essential part of navigating these challenges is to have a robust risk mitigation programme in place, based on adequate integrity due diligence.
The Corruption Challenges Index is compiled by Risk Advisory’s due diligence, political and security experts.
The index assesses corruption threat, regime instability and accessibility of information in 187 countries to arrive at a ‘Corruption Challenge’ score, and a resulting ‘Most Challenging Jurisdiction’ ranking.
In countries where the threat of corruption is elevated, integrity due diligence performs an essential risk
management function. But when information is scarce or unreliable, due diligence requires specialist knowledge and research skills to undertake. The most challenging countries are those where threat is high and due diligence difficult. The index is designed to quantify this nexus.
Our experts were asked to grade each country on the likelihood of two scenarios: 1) foreign investors
encountering corruption in seeking a significant government contract, licence or permit (grand
corruption), and 2) a business operating locally enduring small scale official corruption to undertake
day-to-day operations (petty corruption). These scores were added to a regime stability score to arrive at a
Corruption Threat rating (T).
This is offset against an Opacity score (O), which is based on our experts’ assessments of the comprehensiveness and reliability of public information, media openness, the freedom of human sources to converse and particular linguistic barriers such as transliteration or complex translation.
The Corruption Challenge score (C) subtracts Opacity (O) from Corruption Threat (T):
C = T – O
The index’s most challenging countries are those assessed to have a high risk of both petty and grand corruption, less stable regimes and low availability of public information and business intelligence.
In addition to building the index we also asked our analysts to consider the three business sectors that are most exposed to corruption in each country.
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