Country Governance is crucial for investors, as BP found recently, taking a $24bn charge in its accounts, after deciding to abandon its 19.75% stake in Rosneft, the Russian oil and gas giant.

Many other companies and investors have lost heavily in recent years by allowing short term profit to outweigh the risk of dealing with countries with poor Governance. It's all too easy to ignore warning signs and dismiss them as applying only to organisations that have somehow fallen foul of a particular regime. Just one example of a warning sign (largely ignored by investors in Russia over 15 years ago) is shown below as an appendix to this Insight.

To help investors to measure risk in relation to Governance, World Economics has devised a continuously revised global Index, to bring together crucial aspects of Governance that collectively measure just how good/bad countries are in relation to legality, media and political freedom, and corruption. The Index would (for example have shown BP that Russia was close to the very bottom of the global Governance league, and perhaps one of the last places in the world in which to invest shareholders capital.

The Global Governance Index gives Russia an E rating - the lowest of the five A-E ratings (read more here). The warning signs are plentiful. There are many reasons why investors should avoid Russia, and over 30 other countries with very poor Governance (and even more with slightly less awful Governance). The Governance full Index is shown here.