Trading across borders opens new markets, and it brings risks that domestic trade does not. Naming them is the first step to managing them.
Main risk categories
- Credit and payment risk: the buyer may delay or fail to pay.
- Performance risk: goods may not match what was agreed.
- Currency risk: exchange rates can move between contract and payment.
- Transport risk: loss or damage in transit, and delays.
- Regulatory and political risk: changing tariffs, licensing, controls or sanctions.
- Fraud risk: fake documents, impersonated companies and unrealistic offers.
Ways of managing them
- Due diligence on every counterparty.
- Clear contracts, including dispute-resolution terms.
- Payment security such as documentary credits or guarantees where suitable.
- Insurance for goods in transit.
- Verification of any financial document with the bank named on it.
If an offer seems too good to be true, or pressure is placed on you to act quickly, pause and verify independently.
