“There is no place to hide from country risk,” says Prof. Aswath Damodaran (NYU Stern School of Business) in his latest biannual update that includes free spreadsheets on country risk premiums, sovereign CDS (credit default swap) spreads, corruption scores, political risk scores, and more. In the past, this has been Damodaran’s most popular download.

Big picture: Investors are “delusional” if they think they can avoid dealing with risk in other countries by investing in just U.S. stocks, he says. A company’s exposure to country risk should not be determined by where it is incorporated and traded but rather from where it gets its revenue, he says. In 2015, the companies in the S&P 500 derived approximately 44% of revenues from foreign markets, he points out. When valuing companies with substantial foreign operations, the country-specific input can be critical. A country risk premium must be used, by either adjusting the cash flows or changing the discount rate. What’s more, it’s not just emerging countries you have to worry about.

Damodaran also updated his related paper on SSRN, and he has a YouTube video that summarizes his latest findings and talks about how to incorporate country risk into valuation.

Extra: Country-specific risk is just one of the topics covered during the recent BVR webinar, Tour de Value: Team iiBV Tours the Global Valuation Landscape, which was conducted by a panel of global valuation experts.