Country Risk Assessment

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Country Risk Assessment:
Brazil and the Financial Services Industry

Table of Contents

Executive Summary…………………………………..….…………………………...03 Overview of Financial Services in Brazil…………………………………………..04 Brazil’s Political Factors……………………...…………..….……………...….…...06 Brazil’s Economic Factors……………………………….…..….…..……………….07

Brazil’s Social Factors…………………………………..….………...…………....…10
Brazil’s Business Environment.................................................................14 Brazil’s Physical and Virtual Infrastructure…………….………...……………..17 Conclusion…………………………………..….….….........................................18 Appendix……………………………………………………………....……...………..19 Bibliography………………………………………….……………….…………..……20

Executive Summary
As older companies dwindle in the economic market, emerging companies with new and improved products are being formed. These new companies are taking over the economic market today and only the profitable ones will remain. Through the demand of the emerging companies, the risk assessment agency has been asked to complete a detailed risk assessment of Brazil’s financial services industry. The agency has done some extensive research of the political, economical, and social factors that affect the results of the financial services industry. Brazil’s business environment and physical and virtual infrastructure have also been examined. A table is shown below, illustrating our risk assessment of each major dimension within Brazil’s financial services industry. Each section was weighted and evaluated on a scale of 1-5, with 1 being the lowest level of risk and 5 being the highest level of risk that can be assigned. Dimensions| Weight| Risk (1-5)| Weighted Average|

Political Factors| 30%| 3.6| 1.08|
Economic Factors| 25%| 3.05| 0.7625|
Social Factors| 15%| 3.25| 0.4875|
Business Environment| 20%| 2.2| 0.44|
Infrastructure| 10%| 1.5| 0.15|
Total| 100%|  | 2.92|

At the end of the report in the Appendix, each of the five dimensions were broken down further into specific topics and rated on an individual basis. All individual topics within their sections were totaled to find the overall risk assessment of each dimension. You can see from the table above that political factors carried the highest weight and were determined to be the highest risk dimension. After evaluating all the factors of risk, there were two main risk topics that were rated the highest. Corruption and educational opportunities were rated at 5 because they seemed to play a huge role with potential drastic changes. Overview of Financial Services in Brazil

The Brazilian government, together with the Brazilian Central Bank has been working hard to improve its financial system. Brazil’s financial sector consists of 2,339 institutions, according to Brazilian Central Bank at the end of 2009. Commercial banks dominate the financial sector, along with the public financial institution that usually supports the agricultural and rural sector with subsidized loans. Another valid representative in the financial sector is the smaller credit co-operatives that sustain the lower- income retail segment and micro to mid-sized business. It all started back in 1990 with the implementation of a new currency called Real. The idea behind it was to create a more stable currency. In previous years, the Brazilian market suffered from bad macroeconomic policies which resulted in high inflation rates. Thus, with the establishment of a new currency and a completely new macroeconomic policy, Brazil can watch its financial sector grow. The past few years has made Brazil more stable in terms of the financial sector. Their economy is now growing at a steady pace and on top of all the good news, there are many social gains as well.            The financial market was the sector that faced the most benefits because of changes that occurred over the years. Brazil’s financial service industry has seen an explosive...
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