Protests, early elections, and the low level of vaccination are the problematic factors reported by Euler Hermes.
Bulgaria and Romania are the countries with the highest social risk in the European Union. This shows the Social Risk Index, which surveys 185 countries around the world. The ranking is prepared by Euler Hermes – a leader in commercial credit insurance in the world and in our country, and the assessment takes into account various factors that indicate the degree of vulnerability in the long run. It provides a perspective on social tensions, which can have an impact on government, business development, and the investment climate.
The Social Risk Index ranks countries 1st to 185th, with those with the lowest risk at the forefront. Thus, Bulgaria ranks 59th, followed by only one member state of the European Union – Romania (63rd place). Experts point out that the two countries are the poorest in the EU and have the lowest level of public confidence in governance, as evidenced by a series of early elections. The assessment also took into account the low level of vaccination against COVID-19 with access.
The country with the lowest social risk in the world is Denmark, and Norway and Sweden are also in the top three. France and the United States are the two developed economies for which Euler Hermes analysts report a significant increase in social risk compared to a previous study published in June 2020. In the current ranking, they rank 17th and 35th, respectively.
The winners in Central and Eastern Europe are the Czech Republic and Slovenia with 19th and 20th positions. With a better ranking than Bulgaria are countries in the region that are still outside the EU – Serbia, and Montenegro – in 46th and 55th place.
Russia (75) and Ukraine (81) are behind, and Turkey (122) is in a very worrying position, where tensions are rising due to the weakening Turkish lira and declining purchasing power. “At the bottom” are Congo (185), Sudan (184), and Afghanistan (183).
“The Social Risk Index takes into account 12 parameters and in the long run can guide us to the vulnerability and stability of business in the respective countries. Therefore, it is another tool for companies to assess the degree of danger in commercial transactions, “explains Kamelia Popova, Manager of Euler Hermes for Bulgaria. “Turkey, Romania, and Russia are traditionally destinations where Bulgarian business finds its trading partners. Therefore, the trend of higher social risk there should be taken into account, among other factors, when concluding transactions. One of the ways for companies to protect themselves is commercial credit insurance, ”she added.
With such a solution, in addition to reducing business risk, companies receive expert assistance to verify their partners and better positions when applying for loans from financial institutions. Trade credit insurance is an extremely suitable tool for risk management in times of serious turbulence, such as the current situation with supply chain difficulties and a serious increase in the prices of electricity, fuels, and raw materials.
The Social Risk Index is calculated taking into account 12 parameters (economic, social, and political), which are assessed individually from 0 (for the highest level of risk) to 100 (for the lowest level of risk). And then the average score for the country is calculated. The higher the assessment of a country, the lower the social risk and the higher the ranking.
The results of the present study cover the period from spring 2020 to autumn 2021. The preliminary estimate was published in June 2020 and covers 102 countries. In order to expand the scope of the survey to a total of 185 countries, the additions to the survey have been assessed retrospectively over the past period, so that the results can be equated and compared correctly to date. Therefore, the ranking of countries announced in 2020 is not relevant to date and cannot be automatically compared with the current ranking. (For example, the 46th position of Bulgaria in 2020 is equated to the 60th.)
The social risk index is not an indicator of imminent social crises or protests.