Risk Assessment

In carrying out foreign trade activities both exporters and investors face many risks that affect their interests. Risk assessment is always based on the specific character of the deal, which the exporter wants to insure. Risk assessment in «KazakhExport» Export insurance company» joint-stock company consists of two components: assessment of political or country risks and assessment of commercial risks. Assessment of projects is carried out on the basis of the country (political) risk assessment and the risk associated with the reliability of the counterparty abroad.

Assessment of business risks

«KazakhExport» Export insurance company» joint-stock company carries out the assessment of each transaction separately, in order to determine the reliability of the buyer. When assessing the business risks, it is necessary to have the fullest possible information about the buyer. We rely on the assessment of the buyer’s country, industry, market position, and financial standing.

Employees of «KazakhExport» Export insurance company» joint-stock company use all available sources of information: annual reports of the companies, data on previous insurance payments, Internet, mass media.

Since 2004, «KazakhExport» Export insurance company» joint-stock company is a member of the Credit Alliance. This provides us access to the credit information database on more than 45 million enterprises and organizations worldwide in on-line mode, as well as the expertise of the members of the Credit Alliance.

Country risk assessment

«KazakhExport» Export insurance company» joint-stock company assesses the country risks according to the list of countries and classification of countries by the risk level, published by the Organization for Economic Cooperation and Development (OECD). This list also contains recommendations for the export credit agencies of the OECD countries on the premium rates depending on the insurance period by country categories.

Country risks are determined on the basis of the rate schedule, where countries are classified into 7 categories according to the level of risk: 1 — the lowest risk, 7 - the highest risk. Countries have a separate category of risk on short-term insurance and a separate category of risk in the medium/long-term insurance of the exports credits and investments. For example, the base rate for the short-term insurance ranges from 0.3% to 2.4% for contracts, where the delay period is up to 6 months.

How exactly «KazakhExport» Export insurance company» joint-stock companyassesses the political risks:

1. Assessment of the risk of expropriation:

• Events of intervention from governmental authorities;
• Defaults;
• Project dependency on the actions of governmental authorities

2. Assessment of the risk of war:

• Existence or likelihood of armed conflict;
• Political and social events;
• Organization of the project’s security system.

3. Assessment of the risk of obstacles to conversion and transfer of monetary assets:

• The amount of external indebtedness and international reserves;
• Cases of interference or restrictions;
• Projects’ potential;
• Agreements with governmental authorities.

4. Assessment of the risk of violation of contractual obligations:

• Need for coverage;
• Defaults;
• Agreements with governmental authorities;
• Contents of the conditions of the contract;
• Regulatory environment.