Risk in Insurance in international trades

What are the various types of risk and uncertainty?

Why do we get expose to the risk?
The principle concept behind the risk in LPG.
Because of globalization the global function and business are getting integrated.
Due to the LPG fall of capitals and labour is increased due to this lots of risk
exposes which the organization has to cop up with it.
As the world market integrated more risk is there.
What is risk?
Any business you do is risk and in international business and trades there is
more risk.

PESTEL environment
By the pestel we get the opportunities and threats.
P- Political, if there is stable government and the trade policies and other
policies form are suitable to do the safe business than its an opportunities.
E- Economical , if you are looking for doing international business than all the
developing nation is good to enter and do business eg- Asia, Africa , Latin
America.
Global economic risk are
1. Macro-economic condition of nation.
2. Economic & business cycle
3. Inflation data
4. Interest rate trends
5. GDP growth rate
6. Increased or decrease in money
7. Fiscal policy
8. Foreign trades data
9. Exchange rates
10.Capacity utilization
11.Employment rate behaviour
12.Monetary policy
13.Aggregate demand and supply
14.Growth inflation & unemployment

S- Socio- culture is the biggest risk in the global environment change

because the life style, taste preference, expectability of the product are
different.
If the consumer behaviours are in our favour than its an opportunities,
If not than it is risk we have to manage it, mitigate it and hedge risk
(means get insurance)
T- Technology it is very important part to develop our business so we
should always try to use the latest technologies. If the technology cant be
developed, modernized and transfer than it is risk.
In developed country capital is an opportunities and in developing
country labours and environment is an opportunities.
L- Legal - Norms, Rules, Regulatory environment.
There is positive correlation between the risk & return.
If higher the level of risk than higher return is expected in form of profit.
The project is viable and expected if NPV is greater than zero.
Various Element of risk are
Country risk
Interest rate risk
Political risk
Exchange rate risk
Liquidity risk
Commercial risk
Credit risk
Payment default risk

International trade risk

Transport risk

Risk Management Comes

Transit risk
Cargo risk
Marine risk
Calamity risk
Product quality risk
Damage risk

Purchase Insurance

Country risk Country risk is the risk of nation social unrest, doing
business in Syria, Ukraine.
Interest rate risk risk associated to the fluctuation of the interest rate.
Political risk government unstable
Exchange rate risk - FCL, Export & Import, FDI, FIIS
Eg- if we take a loan from foreign bank and the value of money is
deprecate than there is negative effect.
If there is devaluation of money than its positive for exporter and
negative for the importer
If appreciated than positive for FCL and Importer and negative for
exporter.
Please purchase insurance (premium on forward cover) taken from bank.
In a deprecating Ragin importer company taking foreign currency loan
(FCL) are involved an insurance against fluctuation.
In a volatile market witnessing Sharpe exchange rate fluctuation.
It is advisable to insure a portion of foreign exchange exposer.
In an appreciating Ragin- importer and borrower may not take insurance
coverage but the exporter will rush to take insurance.
Liquidity risk - (Europe, Italy, Greek, Spain, Portugal, Ireland) there is
risk of liquidity in this country, government financially become insolvent
and use to get bank corrupt.
Commercial risk business risk, New product development, substitution
risk

A project is no longer commercially and technically viable due to intense

competition risk
Adverse development in business trends can bring about business in
market risk
Payment default risk
Letter of credit / bank guaranty
Irrevocable LC
Revolving LC
Risk happen in the payment of open account
Please read second semester book of Export Import Management by Justin
Paul and Rajiv Aserkar.
Business risk Management and Coverage