How to… use risk indices to understand corporate exposure

We understand that assessing risk isn’t easy. You need data you can trust, objectivity from outside your organisation, and the time to make sense of it all. That’s why we’ve formulated indices that turn complex issues into easy-to-understand scores. 

Understanding your risk exposure at a glance

An index simplifies an issue by putting each country’s performance onto an easy-to-interpret and consistent scale. Our scale is from zero to 10, where the former indicates the highest risk and the latter the lowest risk. This allows you to assess a country’s child labour risk by looking at its score and comparing it to the scores of the 197 other countries that we assess.

Skip reading 800,000 words of source material – roughly one and half times the length of War and Peace – that we draw on to create our Child Labour Index. You can assess child labour alongside the 160 other risk issues that we measure, with each based on thousands of data points or hundreds of thousands of words of written analysis.

Sustainability screening score down to the individual indicators that make up each index

Fully transparent methodologies

We understand that if you are going to rely on our data to assess your risk exposure, you need to be able to trust it. We can tell you our methodologies are robust, but the best way for you to trust them is to see them for yourself. Our methodologies are therefore fully transparent and accessible. For every one of our indices, we tell you what we are measuring, how we are measuring it, and the sources we use.

In some cases, there are existing data sources that use numbers to measure an issue. We call these indicators. When creating an index that is derived from data, our challenge is to find the right combination of indicators that capture the risk issue we are trying to measure.

For our Terrorism Intensity Index, for example, we collect our own data on the number of attacks, fatalities and injuries, amongst others.

Our methodologies show how we have combined these indicators, the weights we have applied, and how we have converted real data onto a comparable and easy-to-interpret scale between zero and 10.

For indices where there are no existing data sources, such as our Child Labour Index, we face a different challenge; there are no sources that provide a number to signify how well laws protect children from exploitation, how committed the state is to eradicating child labour, or a count of the number of child workers. Instead, we have to create the data ourselves by turning qualitative, written content into numbers.

We've designed a questionnaire that captures all relevant aspects of the risk issue, with different answer options that reflect a range of on-the-ground risk levels. Our country or thematic experts answer that questionnaire using sources from international organisations, NGOs and governments. This gives us an accurate picture of the risks that businesses face when operating in that country.

Want to see it in action?

We worked with a global telecoms company to develop a country and product category risk assessment in order to screen suppliers and better target supplier audits and self-assessments. Read the full case study