Not all markets offer the same tradeoff between risk and return.

This map shows equity risk premiums around the world—based on estimates from NYU professor Aswath Damodaran. These premiums reflect the extra return investors demand to invest in each country, with higher values signaling greater perceived risk.

The gap is stark. While a handful of stable economies sit near 4–5%, countries facing conflict or economic collapse can exceed 30%, highlighting how dramatically risk perceptions diverge across global markets.

The World’s Riskiest Countries

Check out the data, which is as of January 2026, although Türkiye was updated in February:

To estimate the investment risk premium, Damodaran looked at each country’s credit rating and how much extra interest investors want when lending to it. For countries where government bonds aren’t available or traded, he based his estimate on the differences in equity returns of two emerging markets indices.

As a last step, he added that country risk premium to his estimate of a mature market equity risk premium.

The riskiest countries are those that experience war, sanctions, and economic collapse. Belarus, Lebanon, Sudan, and Venezuela each have the highest equity risk premiums of 30.9%.

Belarusians have faced intense political repression as they responded to the contested re-election of Alexander Lukashenko in 2020. Lebanon is considered a failed state as governance and the economy have collapsed, while armed groups are present on the streets.

There has been a civil war in Sudan since 2023, causing a devastating humanitarian crisis. Meanwhile, Venezuela has a long history of instability; the mismanagement of its oil industry and the economy sent the once-prosperous nation into disarray.

Cuba, Ukraine, Syria, and Yemen, which have also experienced conflict or sanctions, are among a cluster of countries with risk premiums of 19.8%.

Countries Considered Safer Investment Bets

Some of the safest countries include Canada, Germany, Switzerland, Singapore, Sweden, and the Netherlands, with risk premiums at 4.2%. Investors likely treat them interchangeably.

The U.S. has a slightly higher premium at 4.5%, which may reflect recent political polarization and higher equity volatility. Indeed, “Sell America” dominated investor conversations earlier this year amid economic uncertainty, questions around the independence of the Federal Reserve, and the depreciation of the dollar.

Still, it is one of just 19 countries that have risk premiums below 5%.

Europe is not homogeneous. Southern countries, where economies were hit by the 2009 debt crisis, have higher risk premiums. Spain and Portugal sit at 5.8%, Italy at 6.7%, and Greece is 7.1%.

How Investors Back Riskier Markets

Only certain kinds of investors are willing to place risky bets.

Pension funds, for instance, tend to have a low risk tolerance as they are using the public’s pension savings to invest. Investment mandates can also limit how much a fund is allowed to allocate to emerging markets or high-risk strategies. In practice, they can access riskier markets indirectly via diversified funds, where they are able to hedge their bets.

No matter the size of the reward, emerging markets investors tend to focus on countries showing signs of stability, economic and business reform, and an alignment with global long-term themes.

https://www.visualcapitalist.com/mapped-the-worlds-riskiest-markets-in-2026/

https://www.weforum.org/press/2026/01/global-risks-report-2026-geopolitical-and-economic-risks-rise-in-new-age-of-competition/