# Country Risk

*Risk & Portfolio — Finicade finance glossary*

Country risk is exposure that comes from where an asset sits rather than what it is: expropriation, capital controls, war, or a government that stops paying.

Country risk is the exposure that comes from where an asset sits rather than what it is: expropriation, capital controls, currency inconvertibility, war, or a government that simply stops paying. It sets a practical ceiling on corporate ratings within a country, since a firm rarely outranks the sovereign that can tax and regulate it. Diversifying it away requires geographic spread, and it correlates sharply higher in global crises.

**Also known as:** sovereign risk, political risk, transfer risk

**Related terms:** [Emerging Markets](https://finicade.com/glossary/emerging-markets), [Sovereign Bond](https://finicade.com/glossary/sovereign-bond), [Credit Rating](https://finicade.com/glossary/credit-rating), [Exchange Rate](https://finicade.com/glossary/exchange-rate), [Currency Risk](https://finicade.com/glossary/currency-risk)

Source: https://finicade.com/glossary/country-risk