International

Buisness

Submitted to
Sir Umair Shabbir
 Submitted By

Shehroz Ali M. Noman M. Fahad

 Topic

“Risks in
international
Buisness”
 International
Buisness

“International business encompasses all

commercial activities that take place to
promote the transfer of goods, services,
resources, people, ideas, and
technologies across national
boundaries.”
What Is Risk

Risk implies future uncertainty about

deviation from expected earnings or
expected outcome. Risk measures the
uncertainty that an investor is willing to take
to realize a gain from an investment.

Business risk refers to anything that could

impact your company's finances. In many
cases, these financial risks could destroy
your company.
Risks In International Buisness

1. Foreign Exchange Risk

2. Political Risk
3. Regulatory Risk
4. Cyber-security Risk
5. Commercial Risk
6. Cross cultural Risk
7. Currency Crisis Risk
8. Intellectual Property Risk
9. Natural Disasters Risk
Foreign Exchange Risk

Foreign exchange risk is one of the most

prominent international business risk factors.
It arises when companies engage in financial
transactions involving currencies other than
their domestic currency. Any
appreciation/depreciation of the domestic or
foreign currency will impact the cash flow of
international transactions. Since exchange
rates are ever-changing, protecting your
company against this risk is challenging.
Political Risk
The political climate is a crucial
determinant of how your business will
fare in a country. When a country’s
government unexpectedly alters its
policies, it gives rise to political risk that
negatively affects the business. For
instance, a country’s national government
may implement changes in its foreign
trade policy, such as trade barriers that
can adversely impact trade with overseas
companies.
Regulatory Risks

Regulatory risk in international business

implies that a sudden change in a
country’s laws and regulations affects
global markets and specific business
sectors. Companies must adhere to these
regulations set by the governing bodies
while conducting business with foreign
firms.
Cyber security Risk

As technology has become central to

organizations’ setup and growth, it is
crucial to have a safe and secure online
network. This widespread reliance on
increasingly complex and sophisticated
digital systems makes businesses
vulnerable to cyber threats, often
outpacing their abilities to prevent and
mitigate them.
Commercial Risk

Commercial risk in international business

denotes a company’s failure resulting from
poorly-executed business strategies and
procedures. The primary reasons could be
poor choices in selecting business partners,
executing inadequately planned business
strategies, wrong interpretation of business
agreements owing to cultural/language
differences, etc.
Cross-Cultural Risk

Cross-cultural risk in international business

involves the potential challenges companies face
in foreign countries because of differences in
customs, norms, language, lifestyles, etiquette,
and customer preferences.

They must also try to understand the cultures and

traditions of their foreign partners to smoothly
operate in those markets. This is a wise way to
overcome miscommunication, bias, stereotypes,
and discrimination arising from cultural
differences that can hamper international
business relations.
Currency Crisis Risk

The value of the currency falls below a

certain stage it can directly affect the
international business. This effect will be
crucial in the case of small business
owners having export into international
market. Insuring against such crisis is
possible but the investment in insurance
is also costly.
Intellectual Property Risk

Dealing with a foreign country puts you at

risk of theft—both theft of your
customer’s property (data and money)
and your company’s physical, financial
and intellectual property.
Natural Disasters Risk

Floods, fires, hurricanes, earthquakes,

volcanic eruptions and extreme
weather can damage stock and
buildings, injure employees, block
transportation routes and devastate
the local economy.