Risk management in main risk types

Country risk

Country risk is the risk of loss arising when political or economic conditions or events in a particular country reduce the ability of counterparties in that country to meet their financial obligations to the group.

Country risk is monitored through reviews of economic and political data by the country risk teams based in Johannesburg and London. The group uses its extensive network of representative offices and subsidiaries, travels to countries when necessary and uses external sources of information to assess each country to which it is exposed.

A country-rating model is used across the group to determine the relative ranking of each country. The internal model is continuously updated to reflect economic and political changes in individual countries. The results of this process are compared with those of reputable rating agencies to validate the consistency of our model.

Mitigants such as political risk insurance are used to reduce country risk as appropriate.

The geographical analysis of loans and advances shown in the graph below is based on the location of the office recording the transaction.

Geographical analysis of loans and advances (%)