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A Primer on Risk Management in International Trade

D.N. Panigrahi

Product #:W27168
Supplier:Ivey
Discipline:Finance, International Business
Setting:India, Indonesia, Pakistan, China, 2021
Details:Note (PDF) • 18 pages • 2022-10-03

Subjects:

International tradeTradeBusiness managementFinance and investingInternational business

Industries:

Fabrication and manufacturing

Geography:

AsiaIndiaIndonesiaPakistanChina
Your Price:$9.71

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A new entrepreneur planning to start a new exports and/or imports business is confronted with the issue of managing and mitigating various risks in international trade. Risks are inherent to any business, be it domestic or international. However, when business becomes international, the dimensions, complexities, and quantum of risks get amplified. This technical note discusses the nuances of various risks faced by the exporters, such as; credit risk, country risk, and currency risk faced by the exporters, popularly known as the three C’s of international trading risks, and the strategies of mitigating those risks. The note also discusses the various risks encountered by the importers, such as; currency risk, supplier risk, and product risk and the methods of managing such risks.

Learning Objectives

This technical note can be used in undergraduate- and graduate-level courses on international business, international trade finance, or international financial management. The note allows for a discussion of various risk elements encountered by the exporters and the importers in their international trade transactions and the strategies and devices available to them to manage and mitigate those risk elements. After working through the note, students will be able to do the following:
  • Understand and appreciate the various risks faced by the exporters in international trade such as credit risk, country risk and currency risk.
  • Suggest measures to mitigate those risks for the exporters.
  • Identify the various risks faced by the importers in international trade such as currency risk, supplier risk and product risk.
  • Understand measures to mitigate those risks for the importers.
  • Identify and explain the different options of invoicing currency available to an exporter and their relative advantages and disadvantages to the exporters and the importers.
  • Explain the various criteria considered by an exporter while choosing an invoice currency and how to make the optimal choice.
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Note: A Primer on Risk Management in International Trade (English version) | Ivey Publishing