Question

The Risk Rating for countries and corporations is a quite important index to be used by different stakeholders, discuss this importance and give three examples for the users of this rating index (three stakeholders).

Answer 1

Importance of risk rating for countries and corporation for stakeholders is discussed below;

1.Risk rating of country suggest in which country their investment is more secure compare to other company.

2.Risk rating for countries and corporation is based on internal and external environmental analysis of organisation which help steke holder to understand the growh opportunity of corporation so the stakeholder can achieve highest benefit.

3.Risk rating express risk and return trade off which help investor to analyse their return from business.

4.Risk rating of country and corporation give idea of future benefit to stakeholder from project.

Three examples for the users of Risk Rating for countries and corporations is as follows:

1.Shareholder can only invest in corporation after analysing Risk Rating for countries and corporation-Shareholder always want to invest according to risk and return.Ashareholder can invest in risky project if the return is high,in moderate return they will only invest if risk is moderate and if the return is low risk must be low.

2.Supplier-supplier of raw material ia also a stakeholder who consider Risk Rating for countries and corporation to supply raw material to business organisation.

3.Banks and other financial institution is also a stakeholder who provide loan to firm after analysing Risk Rating for countries and corporation.