The recent Russia-Ukraine war has led to a significant increase in country risk premium for both countries. A protracted war will likely lead to an even higher country risk indication for Ukraine and Russia in the near to medium term.
Periods of market upheaval may lead to a surge in country risk indications in the near term under some models, which may be considered excessive when estimating discount rates to value businesses over the long run. Finance professionals should monitor how the current situation evolves and consider using more than one model to quantify country risk, given that no methodology is perfect or universally accepted.
