Global opportunities are not without risks. Discuss. How can these risks be minimised ?

Globalisation refers to the increasing integration of economies around the world, particularly through the movement of goods, services, and capital across borders. The following are the important risks: Political and Regulatory Risks : Political instability in various countries coupled with not so smooth transfer of power results in new Political regimes. Different types of regulations for doing business in host countries poses several potential business risks for any firm. Cultural and Managerial Risks : Products/services have to be tailored to suit customers' preferences and choices, attitudes towards certain products and services, traditions, values and beliefs. There is a need for suitable change in management practices, more particularly relating to human resource aspects. Exchange risk : Every country has its own currency system as the currency of one country is not in circulation in the other country. Therefore, one currency is exchanged with another currency at some rate. The exchange rate keeps on fluctuating causing risk of loss to firms engaged in international business Credit risk : It is the risk of loss due to a debtor's non-payment of a loan or other line of credit (either the principal or interest (coupon) or both). It is difficult to ascertain the credit-worthiness of a foreign buyer. When a foreign buyer goes bankrupt, the domestic exporter faces great loss. Transport risk : Due to long distance between countries, goods are dispatched either by ship or cargo flights. Sea and air transport poses several kinds of transit and transport risks such as collision of vessel, piracy, jetsam, flotsam of vessel resulting in derelicts and wreckage of cargo. Market risk : Competition in international business is severe and market conditions keep on changing frequently. It may not be possible for a firm to compete in international markets. Minimisation of Risks The International Monetary Fund works to help economies manage or reduce these risks, through economic analysis and policy advice and through technical assistance in areas such as macroeconomic policy, financial sector sustainability, and the exchange-rate system. Economies, would need to embrace policy changes to build strong economies and a stronger world financial system Strategic vision to become more competitive, diversification to gain advantages of internationalization. Internationally engaged firm can manage their credit risks by taking a Credit Risks Policy from Export Credit Guarantee Corporation of India. Similarly, transport and transit risks of loss or damage to cargo can be managed by taking a cargo insurance or transport insurance. There are 24 General Insurance Companies in India offering insurance coverage for transport risks. Exchange rate fluctuation risk can be managed by taking forward cover or by Option. Commercial banks in India offer such exchange rate coverage instruments to hedge exchange rate risks. Indian embassies, now offers help in coping up political crises and act to promote India's business interest by taking active interest with political establishment of counter parties. Indian firms should establish strong contacts with Indian embassies abroad.