risks of international business | The Institute of Cost and ...

Risks of international business

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Risks in International Trade are the major barriers for the growth to the same. International trade has been a much debated topic. Economists have differed on the real benefits of international trade. The increase in the export market is highly beneficial to an economy, but on the other hand the increase in imports can be a threat to the economy of that country. It has been the worry of the policy makers to strike the right balance between free trade and restrictions.

Economic risks

1. Risk of concession in economic control
2. Risk of insolvency of the buyer
3. Risk of non-acceptance
4. Risk of protracted default i.e. the failure of the buyer to pay off the due amount after six months of the due date
5. Risk of Exchange rate

Political risks

Risks of international business

1. Risk of non- renewal of import and exports licenses
2. Risks due to war
3. Risk of the imposition of an import ban after the delivery of the goods
4. Surrendering of political sovereignty

Commercial risk

1. A bank?s lack of ability to honor its responsibilities
2. A buyer?s failure pertaining to payment due to financial limitations
3. A seller?s inability to provide the required quantity or quality of goods

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Other Risk

1) Strategic Risk
2) Operational Risk
3) Political Risk
4) Country Risk
5) Technological Risk
6) Environmental Risk
7) Economic Risk
Financial Risk
9) Terrorism Risk

Source: http://icmab.net/what-are-the-risks-of-international-business/

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