Business always has risks, as risks are considered one of the obstacles in business, and removing obstacles is considered a success for this business
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Commercial risks in the field of import and export:
1-Political risks on imports and exports:
Domestic and foreign policy fluctuations in the two countries concerned, such as wars, military conflicts, government coups and other political changes, pose a strong risk to trade.
The impact of political risks on imports and exports can be significant. When a country faces political risks such as internal conflicts, wars, sudden political changes, or economic sanctions, foreign trade can be greatly affected. Trade embargoes or tariffs may be imposed on imported or exported goods, increasing costs and reducing demand. Supply and transportation chains can also be disrupted by political unrest, leading to delays and loss of business opportunities. Therefore, companies and countries must take measures to deal with these risks, such as diversifying their supply sources and markets, improving infrastructure and providing support to affected companies.
2-Trade risks on imports and exports:
It includes:
- Exchange rate fluctuations: related to the change in the value of the local currency against the foreign currency, which affects the cost of foreign purchases and sales. Companies can be protected from these risks by using hedging mechanisms such as currency leases and futures.
- Changes in demand and supply: Demand for imported or exported products or services may change due to changing market needs or global events. Companies must analyze the market, anticipate future needs, and diversify their products and markets to reduce these risks.
- Transportation and shipping costs: Shipping and transportation costs may exceed the cost of imports and exports, especially in cases of long-distance or urgent transportation. Companies should look for reliable logistics partners and negotiate contracts that provide the best prices and services.
- Trade and customs restrictions: Governments may impose restrictions and customs duties on certain products or impose other trade restrictions. Companies must adhere to local and international legislation and regulations and deal with relevant government agencies to reduce these risks.
- Quality and standards issues: Companies may face challenges in achieving local and international quality requirements and technical standards. Companies must apply international best practices and standards in their operations and invest in improving the quality of products and services.
To mitigate these risks, companies must invest in supply chain management, diversify markets and trading partners, and seek alternative sources of raw materials and products. Companies should also seek specialized advice and follow local and global economic and trade developments.
3- Legal and regulatory risks to imports and exports:
There are several legal and regulatory risks related to imports and exports, including:
- Dealing with customs: You may face legal and regulatory risks when dealing with customs, such as unexpected customs duties or problems with import or export declarations.
- Compliance with legislation and laws: You must comply with all legislation and laws related to international trade, imports and exports, such as trade protection laws and intellectual property rights laws.
- Compliance with contracts and agreements: You may face legal risks if you do not adhere to the terms of commercial contracts and agreements, such as a delay in delivering goods or non-compliance with agreed specifications.
- International Trade Restrictions: You may face trade restrictions on imports and exports, such as bans on certain goods or quantitative restrictions on exports.
- Compliance with transportation and shipping laws: You must comply with international transportation and shipping laws, such as sea, air, or land transportation laws, in order to ensure that the goods arrive safely and on time.
To avoid these risks, it is recommended to cooperate with a lawyer or legal expert who specializes in international trade, imports and exports, and to adhere to all applicable legislation and laws in the country in which you trade.
4- Environmental risks on imports and exports:
There are several potential environmental risks to imports and exports, including:
- Spread of animal and plant diseases and pests: Imports and exports may carry diseases and pests that affect wildlife and local plants. For example, moving trees infested with pests can cause them to spread to other areas.
- Environmental pollution: Imports and exports may carry chemical or toxic substances capable of leaking and polluting the environment. For example, petroleum transports passing through oceans can cause oil spills and pollute waters and beaches.
- Shortage of natural resources: Imports and exports may require significant use of natural resources, such as wood, water, and agricultural land. This high use may lead to shortages of these resources and degradation of the local environment.
- Climate change: Imports and exports may carry greenhouse gas emissions resulting from manufacturing and transportation processes, which contributes to increasing the phenomenon of climate change. This may lead to increased temperatures, rising sea levels and a change in the rainfall pattern.
- Loss of biodiversity: Imports and exports may move organisms from their original habitats to other areas, causing the extinction of native species and destroying biodiversity.
To reduce these environmental risks, we must implement measures such as monitoring imports and exports, stimulating fair and sustainable trade, using renewable energy, and adopting environmentally friendly technologies and production methods.
5- Financial risks on imports and exports:
Imports and exports are exposed to a variety of financial risks that must be taken into account when dealing in this sector. Common financial risks to imports and exports include:
- Exchange rate risk: Clients may be exposed to financial losses due to exchange rate fluctuations. For example, if a company imports goods from a country with a different currency, fluctuations in the exchange rate of that currency against the local currency may affect the cost of imports and confuse financial planning.
- Risks of surplus and deficit in the trade balance: The country may be exposed to financial risks as a result of a surplus or deficit in the trade balance. For example, if there is a trade deficit, this may cause the local currency to depreciate and increase the cost of imports.
- Inflation risk: Inflation can affect the value of the local currency and thus the cost of imports and exports.
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6- Logistical risks on imports and exports:
Imports and exports are exposed to multiple logistical risks that must be carefully considered and managed. Here are some common logistics risks that can affect imports and exports:
- Delay in delivery: Delay in goods arriving at their intended destination may occur due to factors such as time constraints, transportation disruptions, or problems at customs. This can result in delays in providing products to customers or loss of market opportunities.
- Loss or damage to goods: Loss or damage to goods may occur during transportation and storage operations. This can be the result of mishandling, accidents or bad weather conditions. Precautionary measures should be taken such as using appropriate packaging and providing insurance to compensate for any potential losses.
- High transportation costs: High transportation costs can affect the profitability of business operations. Sea, air or land shipping costs may be high, and different options must be evaluated and the most cost-effective method selected.
- Customs and customs clearance issues: Imports and exports can experience delays and problems in customs clearance, affecting time and cost. You must comply with customs requirements and submit the necessary documents correctly to avoid legal problems and delays.
- ICT: Logistics success depends on the effectiveness of the information and communications system that supports it. Appropriate infrastructure must be provided and appropriate information technology used to improve communication, goods tracking and operations management.
- Changes in legislation and regulations: Changes in legislation and regulations related to international trade must be monitored. Changes in regulations may affect customs procedures, costs and risks associated with imports and exports.
To reduce logistics risks to imports and exports, effective logistics management strategies must be developed and operations carefully monitored. Work should also be done to improve planning and coordination between all parties involved and to select reliable and specialized logistics partners.
To reduce these risks, companies and governments must implement risk management strategies and develop strategic