Reply To: How to assess and manage various types of risks in trade finance.

[Nithi Belliraj]

Hai
International trade has particular characteristics that give rise to different types of risks. The primary risks are:

1. Product risks
2. Manufacturing risks
3. Transport risks
4. Currency risks
5. Country risk
6. Corporate risk
7. Commercial risk
8. Fraud risk
9. Documentary risk

Managing risk is a collaborative, cross-functional and big-picture effort. ISO’s five-step risk management process comprises the following and can be used by any type of entity:

1. Identify the risks.
2. Analyze the likelihood and impact of each one.
3. Prioritize risks based on business objectives.
4. Treat (or respond to) the risk conditions.
5. Monitor results and adjust as necessary.