Expanding your business overseas can be extremely rewarding; however, it doesn’t come without its fair share of risks. In this blog, we provide an overview of the different types of risk your international business may be exposed to, plus how to mitigate them for smoother operations and transactions.
Key risk factors to consider in international business transactions
Foreign Exchange (FX) risk
- Forward contracts
This customised contract between two parties enables them to buy or sell a currency asset at a specified price on a future date.
- Currency options
A currency option gives buyers the right (but not the obligation) to buy or sell currencies at a specified exchange rate. This is usually within a specified time.
- Trade barriers
- Contract termination
- Asset confiscation
- Investing in political risk insurance.
- Diversifying your global presence – for example, a local IBAN with 3S Money can help you scale in new global markets.
- Building good relationships with local authorities and partners.
- Investing in cybersecurity measures like encryption, firewalls and employee training to safeguard your data
- Developing effective data backup and recovery plans prior to any cyber incidents
- Market volatility
- Any economic conditions that can impact business
- Conduct thorough market research and analysis to understand the ins and outs and demand of your target market.
- Diversify your products and services by offering a range to your clients.
- Create contingency plans so that you can respond quickly to change.
Managing economic risks in international business: the guidelines
Use a reliable B2B money transfer service
Plan for fiscal crises
Ensure compliance with local regulations and legislation
Manage your transaction risks with a 3S Money account
Our clients can be confident knowing that:
- Payments are protected by international regulatory bodies
- Dedicated client managers are on hand offering a consultative approach to your business banking needs.