Please respond to this thread The risk I chose is financial risk. The threat of financial risk exists when a company decides to engage in…

Please respond to this thread

The risk I chose is financial risk. The threat of financial risk exists when a company decides to engage in international financing activities such as trade. Because every country has its own currency, the value of the currency may change over time. These fluctuations in the rate may present a risk to profits. There are a host of factors that can affect foreign exchange rates. Some governments might impose additional funds or tariffs in exchange for the right to export items into their country. This is done to help to protect domestic producers from foreign competition. One solution that companies can utilize to neutralize the threat is to trade with countries with low debt to GDP that has rising currencies. They can also diversify the locations in which you trade. They should be knowledgeable of the laws of that particular country and know if they can enforce claims. 

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