A Firm Is Evaluating Country Risk as a First Step

Essay

A firm is evaluating country risk as a first step in its outsourcing provider selection process. Legal issues, currency risk, political risk, and cultural compatibility have been assigned weights of 30%, 10%, 20%, and 40%, respectively. Three countries were scored on each of those risk factors (see table below) using a scale of 1-10, with a score of 1 meaning high risk and 10 meaning minor risk. Using the factor-rating method, which country appears to have the least risk overall?
$$\begin{array} { | l | c | c | c | } \hline & \text { Country A } & \text { Country B } & \text { Country C } \\\hline \text { Legal issues } & 2 & 6 & 10 \\\hline \text { Currency risk } & 8 & 4 & 2 \\\hline \text { Political risk } & 5 & 8 & 2 \\\hline \text { Cultural compatibility } & 3 & 1 & 2 \\\hline\end{array}$$