The point system used to encompass an 8 year period. It's down to 4 since 2006.
Here is the broad formula : Ranking points = Result points x Match status x Opposition strength x Regional strength
result points: 3 for a win, 2 for a penalty shootout win, 1 for a draw, 0 for a defeat.
match status: from 1 to 4 (friendly to WC final phase)
opposition strength: from 0,5 to 1 based on the fifa rankings.
regional strength: from 0.85 to 1
The ranking is determined by computing the average of the past four years, but the more recent years weigh more, like so :
Within the last 12 months × 1.0
12–24 months ago × 0.5
24–36 months ago × 0.3
36–48 months ago × 0.2
Three points of concern:
1) Host countries don't rack up points when they directly qualify for whatever tournament takes place ( Apparently Brazil fell to a historic 22nd place right before the world cup ), France is in that situation atm.
2) Friendlies are shit in terms of the rankings. Since their ratio (match status) is 1, and most other games are 2.5 up to 4.
they actually bring the average score down
quick example with made up numbers: germany has 8 wins and 2 losses in the euro qualifiers for an average score of 2.5 points. They win all 5 friendlies for an average score of 1 point.
The rankings apparently don't compensate for this problem which is odd since it can easily be compensated...
3) Regional strength seems a bit too rigid (the best region is merely estimated to be 18% stronger than the weakest)
Anyway, the elo ranking looks better at the moment.
edit: from wikipedia (original source isn't in english) Romania were one of the surprise seeds for the 2018 World Cup preliminary draw after taking advice from a consultant and playing only one friendly in the year before the draw.
Lol. That may explain Romania' s recent performances in the rankings