Export risk management refers to minimizing loss when selling goods and exporting them from your country to the foreign market. There are steps in which you can follow to avoid these risks when exporting goods. They include:

  • Identifying all potential risks especially the common risks.
  • Rank and rate each risk according to how often they may occur and how safe it is.
  • Analyse and evaluate the strategies to manage these risks
  • Monitor and counter-check these risks over time as conditions and circumstances become different over time

These risks can include macroeconomic risks like, risk of inflammations, political risks which include civil unrest or economic sanctions or business-specific risk like the potential for decreased market demand in a foreign country and changes to customers’ creditworthiness.

Other risks are:

  • Legal risks
  • Quality risks
  • Transportation and logistics risk
  • Language and cultural risk

So how can you save yourself from all these risks? Having export insurance may save you from a loss but when one can get insurance? It’s very important when planning to get a risk to know if it’s worth it. I mean, compare the risk severity with the price of insurance it can cover. This might save you lots of money as some risks can be managed by hiring the right staff for your company.

Some of the insurance coverages include:

  • Export credit insurance
  • Political risk insurance
  • Transportation and logistics coverage

Things to learn when doing export risk management:

  • Knowing the foreign market and their history is very important. For instance, you cannot just export goods via a country that has a history of post violent elections when elections are being conducted.
  • Transportation of goods. As in, which mode of transport is being used transporting a certain good. Some products need a fast mode of transport, for instance, flowers while others are durable but too heavy, they need a reliable mode of transport
  • Learn more about the importers. If they have defaulted on their loans or is their creditworthiness worth it. This might save you from a good deal gone sour
  • Not to export to earthquake areas since a natural calamity or a disaster may destroy your goods and that is not good for business.
  • Plan and research on the suitable foreign market with the least risks and are manageable.

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