Top 5 Risk To Keep in Mind When Dealing With International Transfers
by IRM India Affiliate World's Leading Professional BodyForeign
exchange risk
Exchange rate risk is usually related to the receivables and liabilities of the
contract that has become effective or will occur. The exchange rate is
constantly changing, which may force companies to convert funds received abroad
at a lower exchange rate than planned. Companies must adopt monetary policies
to: stabilize sales returns; mitigate the negative impact of currency
fluctuations on acquisitions and sales; improve cash flow control; simplify
domestic and foreign prices; their exchange rate risks, identify tools that can
be used to compensate for these risks, and conduct regular benchmarks test to
choose the most effective tool with foreign
exchange risk management.
Credit risk
Credit or counterparty risk is the risk of not receiving any receivables.
Companies entering the global market can protect themselves from this risk with the help of credit risk
management. The amount that should be paid at
the time of order before the service is provided. This method can be used to
fund transactions, reduce financial and management costs, and eliminate the
risk of default. New exporters and companies lack sufficient influence in
negotiations, so it is difficult to use this method.
Intellectual property risk
Intellectual property risk is
the risk of a third party misusing the company’s strategic information
(research, research, agreements and contracts, customer lists, trade secrets,
etc.) or property that directly or indirectly affects the value of the
company’s products or services (patents, designs, trademarks, know-how, etc.).
In international business, intellectual property risks have increased tenfold due to the difficulty of
remotely protecting the commercial rights of the property.
Shipping risks
Whether you are transporting goods at home or abroad, you are facing the risks
of damage, loss, theft, vandalism, accidents, seizures and pollution. Before
shipping the product, please hand over the responsibility of shipping to the
buyer or seller and obtain adequate insurance. The "General Rules for the
Interpretation of International Trade Terms" of the Chamber of Commerce
defines the roles and responsibilities of all parties in terms of
transportation risks. It is best to cooperate with the carrier.
Ethics risks
In any market, maintaining high ethical standards and becoming a good citizen
is a challenge. Trading in the global market may cause some companies to
question its value. You need to be extra vigilant because the customs and
social conditions vary from country to country. Foreign partners and suppliers
abide by their ethics and values no matter where they work. You
can help yourself here with the help of ethical risk management.
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Created on Apr 28th 2021 09:38. Viewed 290 times.