Risks banks and customers use trade services to reduce

Risks in International Trade are the major barriers for the growth to the trade. The assessment of risks in the International Trade plays an important role in deciding the modes of payment to be used for the settlement between buyer and seller. We tend to think of risk in pre dominantly negative terms, as something to be avoided or as a threat that we hope won’t materialize.  Understanding risk is one of the most important part of International Trade.  A common definition for investment risk is “deviation from an expected outcome”. Deviation can be positive or negative, and it relates to the idea of “no pain, no gain”-to achieve higher returns in the long run, you have to accept more short term volatility.  How much volatility depends on your risk tolerance, an expression of the capacity to assume volatility based on specific financial circumstances and the propensity to do so. In ideal risk management, prioritization process is followed where by the risks with the greatest loss and the greatest probability of occurring are handled first, and rifts with lower probability of occurrence and lower loss are handled in descending order.Risk management is the identification, assessment prioritization of risk and the possibility that an event will occur and adversely affect the achievement of an objective. Risk itself has the uncertainty. Risks can come from various sources including uncertainty in financial markets, threats from project failures, legal liabilities, credit risk, accidents, natural causes and disasters, deliberate attack from an adversely, or events of uncertain or unpredictable root cause. There are two types of events i.e. negative events can be classified as risks while positive events are classified as opportunities. Trading globally gives consumers and countries the opportunity to be exposed to new markets and products. Almost every kind of product can be found on the international market: food, clothes, spare parts, oil, jewelry, wine, stocks, currencies and water. Services are also traded: tourism, banking, consulting and transportation. A product that is sold to the global market is an export, and a product that is bought from the global market is an import. Imports and exports are accounted for in a country’s current account in the balance of payments.  In an international trade goods and services are involved, the buyer and the seller negotiate details about the method and timing of both payments and delivery. These negotiations require attention to complex details concerning credit arrangements, transaction structuring, legal issues, political and cross border risks. This research paper will define about different risks involved in international trade and how banks and customers use trade services to reduce the risks associated with trade transaction. This research work will be a benefit for corporate law researchers as this work will provide all risks involved in international trade and method of solving all these risks. This research paper can also help us to compare the trade transactions of  both Pakistan and United Kingdom. In International Trade, risk is inseparable from return. Every investment involves some degree of risk. A solid understanding of risk in its different forms can help investors to better understand  the opportunities, trade-offs and costs involved with different investment approaches.


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