Keys to internationalisation
Keys to internationalisation > Risk management. Insurance.
Any commercial exchange activity involves risks; these risks are higher when the activity is on an international scale. The risks of internationalising a project, an activity or company are higher than on a domestic level due to the confluence of more variables in the process. The operating distance, language, cultural differences, and legal systems that differ from one country to another are sources of risks. Not delivering or not being paid for that agreed or not earning what you expected are the main risks that you have to face in an internationalisation process.
Risks are an integral part of any business activity. However, the existence of risks should not stop you creating a company or opening new business lines. Companies should try a be competitive at the same time as being profitable. These two parameters are put into danger if the risks involved are not evaluated correctly.
The Innovation and Industry Bureau is aware of the difficulties companies face when being competitive on a world-wide level in an arena marked by:
- Growing economic globalisation
- A push for innovation
- The deregulation of markets and borders
- The disintermediation of business relationships
In this arena, we would strongly recommend that you perform an in-depth risk analysis. It does not matter how detailed the analysis, the risk will not go away. However, it is necessary to know each risk factor, both abroad (market) and at home (production, HR, finance, etc.). You need to identify the risks and measure their impact on your international strategic plan. The risks need to be identified and their possible impact analysed. From this stand point you can make the decision as to whether you need to adopt coverage measures, or not. This is what is meant by risk management.
Browse byGalicia. We can help you identify and classify the risks and available coverage instruments:
Remember good information sourced from a detailed market analysis will help you to make the right decisions. It is the best way to reduce risk variables. Remember too that the contract is the document regulating the commercial relationship between the parties. All possible risks that you can have identified and covered in the contract will help you avoid problems later.
Can risks be avoided?
Risks cannot be avoided. Any commercial activity involves certain risks. You have to manage them in the best way possible. The maxim that the higher the risk the greater the profit is also true on an international business scale. The important thing is that you know at all times where the risk is coming from, what its cost or impact may be, how to protect yourself against it, transfer it or assume it.
