The risks of exporting
Even though exporting is the lowest possible commitment to internationalization, it still
comes a long with a lot of risks. Each company that wishes to go abroad and decides to
either directly or indirectly export their products to another country, needs to analyze all the
things that could possibly go wrong beforehand.
In the following, you will find the most common and biggest risks that could appear when
exporting goods:
One of the most unpredictable risks are the political ones. Political risks are considered to be
any extraordinary state measures or political events abroad, such as wars, revolutions, civil
unrest, nationalization, etc. Such situations may in particular result in the customer being
unable to pay or the products being confiscated or damaged.
Another risk, the commercial risk, refers to the customer’s insolvency or unwillingness to
pay. For the exporting company, this can lead to a liquidity problem, as a result of which it
cannot accept new orders because it lacks the necessary means of production.
Furthermore, there is also the foreign exchange risk. This refers to the price fluctuations of
the own currency in relation to the foreign currency in which the exports are invoiced. The
worse the exchange rate, the smaller the margins for exports in foreign currencies.
One of the risks that one can least anticipate is that of force majeure. Force majeure means
unforeseeable events (natural disasters etc.) which make the shipment of the goods
impossible or unreasonable.
There are many other risks that can occur in the course of an export, such as problems with
the transport, etc. In the end, you have to know what kind of risks exist, which ones could
possibly affect your business and how you can prevent them from having any negative
effects on your internationalization.
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