Risk is a given in any investment. It is incorporated into valuation in the cost of equity and debt which flows into the discount rate. A risk premium is added on international projects. This page looks at why this is so.
When you are valuing a business in a foreign country that has a different risk profile from your home country, you consider a country risk premium. The country risk premium accounts for the difference in risk on account of political stability, currency fluctuations, cultural differences, etc. The argument for using a country risk premium originated from the higher risk involved in developing country markets. The higher variances of developing markets when compared to the home country supported using a country risk premium.