Top 5 Risk To Keep in Mind When Dealing With International Transfers

Foreign 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 281 times.

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