Corruption Challenges Index 2020 Corruption danger spots for business in 2020
Risk Advisory’s annual measure of the world’s most and least challenging countries for foreign investors in relation to corruption levels
Welcome to Risk Advisory’s Corruption Challenges Index 2020, our fourth edition, which identifies countries and territories which pose the biggest corruption challenges for foreign investors. The index is a useful measure of where and how corruption manifests itself locally. Our scores are based on a number of factors such as levels of FCPA enforcement action and local industry risks, as well as accessibility and reliability of information – a crucial line of defence for people whose jobs involve protecting organisations against corruption.
It is important that businesses are aware of which countries and sectors have a significant risk of corruption. The Corruption Challenges Index is an essential guide for businesses conducting work globally, ensuring awareness of where corruption challenges lie and why you should conduct thorough due diligence before investing in such a country.
Key features:
- Three interactive maps showing the overall challenge of doing business in each country (Corruption Challenge Index score); the highest and lowest threats posed (Corruption Threat); and the availability of reliable information (Opacity)
- Top 3 sectors exposed to corruption in each region and globally
- Top 10 league tables indicating the most and least challenging countries
- Regional leaders revealing the top 3 and bottom 3 challenging countries for each region
- Regional viewpoint analysis from our global team of experts, highlighting trends and themes.
- Construction and development, infrastructure, and oil and gas remain the most challenging industry sectors from a corruption point of view globally
- Turkmenistan remains the country where businesses face the biggest corruption challenges, followed by North Korea and then Libya
- Europe continues to feature positively in the Index and dominates the list of least challenging countries. It also has the lowest average corruption challenge score
- Middle East & North Africa generally performs poorly in the Index with the highest average corruption challenge score. It also claims five out of ten countries where the threat levels are highest for unstable regimes and the likelihood of encountering corruption
- Globally, the greatest Threat (T) of corruption lies in Central African Republic, Libya and Yemen
- The ability to source reliable information is at its worst in Turkmenistan, North Korea and Laos – marked as Opacity (O) scores on the maps.
Methodology
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 Security Intelligence & Analysis Service (SIAS).
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, specialist knowledge and research skills are needed. The most challenging countries are those where the threat is high and due diligence is 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. Variables also include 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. It’s based on more than 500 investigations we have conducted over the last 12 months. We were then able to produce regional and global frequency analyses based on this data.
Corruption Challenges Index editions
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