The Corruption Challenges Index is compiled by due diligence experts from Risk Advisory’s seven regional business intelligence teams, with country risk scoring from our political and security risk focused Intelligence & Analysis team.
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, and 2) a business operating locally enduring small scale official corruption to undertake day-to-day operations.
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. We have also added new subsets of variables, including how accessible certain public records are (such as corporate filings, litigation filings, and media reporting).
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. We were then able to produce regional and global frequency analyses based on this data.
Working example below:
From our assessment, India’s Corruption Challenge score (C) is relatively low. Although the Corruption Threat (T) level is comparatively high, source information is readily available and of a good quality (O); hence offsets India’s overall Corruption Challenge score (C) which is somewhat low, and therefore it is a country which is relatively straightforward to do business in.’