Every July, NYU valuation professor Aswath Damodaran publishes his annual country-risk update, and the 2026 edition is out on his blog, in full and for free. His starting point is that country risk used to be an afterthought in finance education, taught as something a globally diversified investor could simply diversify away. He argues that view was always wrong and is more wrong now. On the business side, companies draw an ever-larger share of both revenues and costs from foreign markets, technology firms especially, so a firm's true risk depends on where it operates, not just where it is listed. On the investor side, the pull abroad started as diversification but became a hunt for higher returns, amplified by index and mutual funds that made global exposure effortless. The post then does what Damodaran is known for: it lays out how to actually measure these differences across countries and, crucially, how to fold them into valuation, higher country risk means a higher discount rate and a lower value for the same expected cash flows. For readers, the value here is less a single stock call than a durable framework: when you value a company with meaningful emerging-market or geopolitically exposed operations, the country you are standing in should change the number you are willing to pay.
Why it matters · A company's fair value depends on where it operates, not just where it lists, so country risk belongs inside the discount rate.
Worth asking · Should investors demand a bigger discount for geopolitically exposed companies, or is country risk already priced in?