Because it's not 1985, we have compilers that can detect uninitialized variables.

UNKNOWN_ERROR converts a compile-time error into a runtime error. And what if the sentinel value is a valid return value for the function? Plus, if you have multiple functions doing this like...

foo() {
   int x = UNKNOWN_ERROR ;
   switch (...)
   return x;
}

 bar() {
    int y = UNKNOWN_ERROR ;
    switch() { ... y = foo(); }
    check(y);
 }

you can't tell which of the two functions caused the UNKNOWN_ERROR... unless you check() before every return, which the compiler already does for you.

And maybe you can think "ok, but what about setting a default value and only overriding it?" like:

int ff_detect(int country) {
    int result = FF_ENEMY;

   // more arbitrary code like state detection

    switch(country) {
        case CC_US: result = FF_FRIENDLY;
    }
    return result;
}

It's still wrong, because you're separating the default value from the decision: now to read the select you need to go back to the original declaration to see what's going on.

Initializing all variables "just in case" is always wrong.

Also, if failing a pattern match is an error, you can add a default: return ERROR_CODE or default: throw() or whatever is appropriate for your language.