RISKS INVOLVED IN FOREIGN TRADE
As an exporter while selling goods
abroad, they encounter various types of risks. The major risks which you have
to undergo are as follows:
- Credit Risk
- Currency Risk
- Carriage Risk
- Country Risk
You can protect yourself against the
above risks by initiating appropriate steps.
CREDIT
RISKS
You can cover your credit risk against
the foreign buyer by insisting upon opening a letter of credit in your favour.
Alternatively one can avail of the facility offered by various credit risk
agencies. A specific insurance cover can also be obtained from ECGC (Exports
Credit & Guarantee Corporation) to cover your country risk besides covering
credit risk.
CURRENCY
RISKS
As regards covering the currency risk,
due to the exchange rate fluctuations, you can request your banker to book a
forward contract.
CARRIAGE
RISK
The carriage risk can be covered by
taking an appropriate general insurance policy.
COUNTRY
RISK
ECGC provides cover to protect the
exporter from country risks.
