Just as there are reasons to get into global markets, and benefits from global markets, there are also risks involved in locating companies in certain countries. Each country may have its potentials; it also has its woes that are associated with doing business with major companies. Some of the rogue countries may have all the natural minerals but the risks involved in doing business in those countries exceed the benefits. Some of the risks in international business are:
Customer risk investigates the identity of customers in the host country. By assessing customer risk, the firm inspects if customers are legally established businesses in the host country or importers, if the firms' exports are compatible with the customers' business profile, what are the customers' credit limits and period, their trading history, their paying credibility and solvency.
Credit risk is associated with the customers' solvency but also the firm's business cycle. To assess this type of risk, the firm needs to take into consideration the amount of credit outstanding - both overseas and domestic - in the trading accounts, the impact of a customer's financial pitfall of the firm, the maximum amount of credit which should not be exceeded, and most importantly how to finance the offered credit period. Having sufficient cash to allow offering credit terms in export sales is a substantial part of the firm's business circle.
Foreign Exchange Risk
Foreign exchange risk is associated with dealing in the host country in more than one currency. This type of international trade risk typically affects export and import businesses as they are exposed to fluctuations in is converted to another currency in .....read more http://news.bytrade.com/info/915-Business-risks-in-international-trade.htm