Global risk analytics company Verisk Maplecroft is launching the sixth annual Legal and Regulatory Environment Risk Atlas (LRERA), which includes 26 indices and interactive maps that have been developed to enable companies to identify and compare potential risks to investments and market entry across 173 countries.
The LRERA provides quantitative data for each country which encompasses the key legal and regulatory risk issues, including: Rule of Law, Corruption Risk, Corporate Governance, Regulatory Framework, Respect for Property Rights and Supply Chain Labour Risk. In addition, Verisk Maplecroft has also added four new indices to assess the Costs of Doing Business in a country.
According to Verisk Maplecroft, the ten countries presenting the overall highest levels of legal and regulatory risk are North Korea (1), Somalia (2), Turkmenistan (3), Central African Republic (4), Eritrea (5), DR Congo (6), Syria (7), South Sudan (8), Myanmar (9) and Afghanistan (10). Despite still being rated ‘extreme risk’, Myanmar, which had already seen the biggest improvement globally in last year’s index, continues its upward trajectory having improved by four positions in the 2015 global ranking compared to last year.
Senegal (71st compared to 51st in the 2014 LRERA) is the most improved economy in the 2015 LRERA thanks largely to a strong anti-corruption drive and the establishment of several anti-corruption bodies by President Macky Sall. The Czech Republic (139th compared to 131st in 2014) has also made marked improvements in this year’s atlas as concerted efforts to improve corporate governance in the wake of the 2007-2008 global financial crisis have led to gains in the efficacy of the country’s corporate boards. Thailand (103rd compared to 112th in the 2014), meanwhile, saw one of the steepest declines in the LRERA as a military coup in May 2014 has caused a severe decline in the rule of law precipitated by the loss of judicial independence that has resulted from military rule.
New indices identify and compare operating/market entry risks for 173 countries
- A new risk pillar has been added to the latest edition of the LRERA assessing costs of doing business and consisting of four new Verisk Maplecroft indices assessing each country’s tax burden, labour costs and barriers to market entry and the aggregate risk of these combined issues.
- The Tax Burden Index measures both the financial cost that various taxes impose on business and the administrative burden associated with complying with each nation’s tax regime
- The Labour Costs Index measures a combination of wage costs, labour productivity and miscellaneous financial burdens on employers to determine the cost-competitiveness of each nation’s labour market
- The Barriers to Entry Index assesses the ease of establishing business operations in any given country in relation to potential barriers including: trade sanctions, government protectionism, local ownership requirements, lack of reliable business partners, linguistic heterogeneity and bureaucracy
- The Costs of Doing Business Index assesses the collective costs associated with tax burden, labour costs and barriers to market entry. By assessing these three issues collectively, this index provides a useful snapshot of the costs associated with operating a foreign business entity in each country.
