1

Group Member 2

ATTIYA AKHtER MUHAMMAD HAMMAD

ROLL# 64 USMAN Roll# 41

SYED MAHNOOR
HASSNAIN ALI AMJAD
ZAIDI Roll# 16-38
Roll# 11

MUHAMMAD BILAL
KHAWAR ABBAS Roll# 37
ROLL# 68
3
Attiya Akhtar
BBFE-17-62
Risk and Business
What is Risk?
The chance that an outcome or
investment's actual gains will differ
from an expected outcome or return. 
Risk and its Types
1. Foreign exchange exposure
and risk
• Transaction risk
• Translation risk
• Economic risk
Risk and its Types

2. Investment risk
• Political risk
• Market risk
• default risk
1. Foreign exchange exposure and risk

Foreign exchange risk refers to the losses that

an international financial transaction may incur
due to currency fluctuations. Also known as
currency risk, FX risk and exchange-rate risk
Foreign exchange exposure and risk

• Transaction risk
• Translation risk
• Economic risk
 
2 . Investment Risk

• Political risk
• Market risk
• default risk
MUHAMMAD HAMMAD
USMAN
ROLL NO 41
What is country risk
assessment?

Country risk assessment, also known as country risk analysis, is

the process of determining a nation's ability to transfer payments.

It takes into account political, economic and social factors, and is

used to help organizations make strategic decisions when
conducting business in a country with excessive risk.
Different types of country risk
1. Political risk
Political risk determines a country's political stability, either internally or

externally.

 A recent military coup would increase a nation's internal political risk for

businesses as rules and regulations suddenly shift

 Other risks in this category could include war, terrorism, corruption and

excessive bureaucracy

 Political risk can affect a country's attitude to meeting its debt obligations and

may cause sudden changes in the foreign exchange market

2. Sovereign risk

Specifically, this risk category measures the buildup of debt that

is the obligation of a government or its agencies.

For example, if a government agency refuses to carry out debt

refunding, this could impact local lenders and lead to losses. This
would of course have roll-on effects to local businesses and anyone
undertaking trade with them.
3. Neighborhood risk
Neighborhood risk, also known as location risk, may not be the direct fault of the
country with which your clients are dealing, but instead is caused by trouble
elsewhere.
Neighborhood risk can be caused by:
 Geographic neighbors.
 Trading partners.
 Co-members of certain institutions or organizations.
 Strategic allies.
 Nations with similar perceived characteristics.
4. Subjective risk
Subjective risk is not a term that is used everywhere, but it
measures factors that are common to most risk assessments – and
could greatly impact foreign business owners trading with a host
nation.

 Subjective risk is about attitudes, and can include social

pressures and consumer opinions – whether to certain types of
goods or certain types of enterprise.
 5. Economic risk
Economic risk encompasses a wide range of potential issues that
could lead a country to renege on its external debts or that may cause
other types of currency crisis (i.e. recession). A major factor here is
economic growth – the health of a nation's GDP and the outlook for
its future.

For instance, if a country relies on a few key exports and the prices
for these are dropping, this creates a negative outlook and may
increase the economic risk for foreign trading partners.
6. Exchange risk

Any predicted loss created by sudden changes in exchange rate

are generally covered under the exchange risk factor
One example of political change that can harm economic risk is a
change in currency regime, for example from fixed regime to
floating.
7. Transfer risk

 The final country risk assessment factor we'll discuss today is

transfer risk. This is where the host government becomes unwilling
or unable to permit foreign currency transfers out of the nation.
 Sweeping controls such as these may be a side effect of a nation in
crisis attempting to prevent creditor panic turning into significant
capital outflow. A major example of this occurring is the Malaysia
credit controls after the 1997-98 Asian currency crisis.
SYED HASSNAIN ALI ZAIDI
ROLL NO 11
RISK MANAGEMENT IN
INTERNATIONAL TRADE
 RISK MANAGEMENT

 Businesses involved in international trade have to deal not just with risks
locally but also other business development risks such as ethics,
transportation, intellectual property, credit, currency, and a lot more. 

 These risks can obstruct the smooth running of the business, and hence,
appropriate measures need to be taken to limit their effects. Here are 6 risks
commonly faced by businesses involved in international trade and the
effective ways to manage them. 
 6 INTERNATIONAL RISK AND
THEIR MANAGREMENT
1.   Credit Risk 

 Counterparty or credit risk is the risk associated with not collecting an

account receivable. There are numerous ways in which businesses can guard
themselves against this risk while expanding to global markets. 
 6 INTERNATIONAL RISK AND
THEIR MANAGREMENT
1.   Credit Risk 

✔     Take payment in full [or a decent percentage of money upfront]

✔     Letter of credit 
 6 INTERNATIONAL RISK AND
THEIR MANAGREMENT
2.   Intellectual Property Risk

 This risk involves third parties making unauthorized use of the

strategic information of a business or property that affects the
value of services or products offered by a business, either
directly or indirectly. 
 6 INTERNATIONAL RISK AND
THEIR MANAGREMENT

2.   Intellectual Property Risk

 These risks increase tenfold when doing business overseas because

of the difficulties that exist in defeating business rights remotely.
This can be avoided by registering the corporate names as well as
the trademarks before signing an agreement in any country. 
 6 INTERNATIONAL RISK AND
THEIR MANAGREMENT
3.   Foreign Exchange Risk

 This usually concerns the accounts payable and receivable for

contracts that are, or soon would be, in force. Foreign exchange
rates are in flux constantly. Hence, businesses would be forced to
make conversions of the funds generated overseas at rates lower
than what is budgeted.
 6 INTERNATIONAL RISK AND
THEIR MANAGREMENT
3.   Foreign Exchange Risk

This is the reason why it is crucial for businesses to have an appropriate exchange

policy in place. This will help in

  Stabilizing profit margins over sales made 
  mitigating the negative impact of fluctuating rates on sales and procurements 
  enhancing cash flow control 
 simplifying domestic and foreign pricing
 6 INTERNATIONAL RISK AND
THEIR MANAGREMENT
4.   Ethics Risks  

 It is vital to maintain a high ethical standard when offering any product or

service in a global market. Companies may face certain questions pertaining
to their values at any point while doing international trade . 

 Social conditions and customs vary from country to country, and hence, it is
necessary to be especially vigilant. You need to make sure that your foreign
suppliers and partners adhere to your values and rules regardless of where
they operate from.     
 6 INTERNATIONAL RISK AND
THEIR MANAGREMENT
5.   Shipping Risks 
 Whether you are shipping goods abroad or locally, you may face issues such as
contamination, seizure, accident, vandalism, theft, loss, and breakage. Before
shipping any goods to the buyers, you need to make sure to 
have sufficient insurance. 
 The International Chamber of Commerce has laid down rules for each party
involved in international trade and their responsibilities with regard to
shipping risk. It is best to go through the rules and take necessary
precautionary steps. 
 6 INTERNATIONAL RISK AND
THEIR MANAGREMENT
6.   Country and Political Risks

 There would be certain things that would never be under your

control, such as sanctions, and you must be prepared in order to
overcome them. You can find more information on such
restrictions by checking the official website of the Ministry of
Foreign Affairs and Trade for the specific country. 
 6 INTERNATIONAL RISK AND
THEIR MANAGREMENT
6.   Country and Political Risks

✔     Exchange Control Regulations 

✔     Prohibited Goods
MAHNOOR AMJAD
ROLL NO 16-38
Risk management is the identification, evaluation,
and prioritization of risks followed by coordinated
and economical application of resources to
minimize, monitor, and control the probability or
impact of unfortunate events or to maximize the
realization of opportunities.
Risk Management Process
Risk exposure is the measure of potential future loss resulting
from a specific activity or event. An analysis of the risk
exposure for a business often ranks risks according to their
probability of occurring multiplied by the potential loss if they
do. By ranking the probability of potential losses, a business
can determine which losses are minor and which are
significant enough to warrant investment.
KHAWAR ABBAS
ROLL NO 68
CASE STUDY
 Challenges and threats for
international business
• Threat to international business is the major fence

• Economic expert disagree on the reality of international business

for a country benefits..

• Increasing exports beneficial.

• Threat in increasing import

• Strike rules to keep balance

Risk in International business
• Economics risk

• Political risk

• Country buyer and seller risk

• Commercial risk

• Other risk to international trade

Conclusion
• The advantages of international trade surpass the risks,firms should take a
risk valuation of both country.
• Firms should also include:
• intellectual property
• bureaucratic procedure and corruption
• human resource restrictions
• ownership restrictions
• In order to consider all risks involved before venturing into any of the
countries.
• Companies also should focus on local and federal system of a county.
MUHAMMAD BILAL
ROLL NO 37
ARTICLE ANALYSIS