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Understanding International Trade Risk, presented at the international Business Fair, held on 12/7/12
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Understanding International Risk
2
Risk Management Identify risk
Commercial risk Foreign exchange risk Country risk Other considerations
Determining exposure tolerance
Understand options available to mitigate risk
3
Commercial RiskR
ISK
OF
NO
N P
AY
ME
NT
RISK
OF N
ON
DE
LIV
ER
Y
OPEN OPEN ACCOUNTACCOUNT
DOCUMENTARY DOCUMENTARY COLLECTIONCOLLECTION
LETTER OF CREDITLETTER OF CREDIT
CASH IN ADVANCECASH IN ADVANCE
EXPORTER RISK
IMPORTER RISK
HIGH LOW
4
Foreign Exchange Risk Transaction
Translation
Economic
5
Country Risk
Political/Sovereign
Convertibility
Transfer
6
Other Considerations
Regulatory
Cultural
7
Exposure Tolerance Identify
Clearly define internal risk tolerances
Implement Devise formal risk management policy
Adjust Revisit on annual basis
8
Risk Mitigation Tools Commercial Risks
Letter of Credit Letter of Credit Confirmation Documentary Collection
FX Risk Hedging: forwards, options
Political (Sovereign Risk) EXIM Insurance
Credit Risk EXIM Working Capital Guarantee Program EXIM Medium-term Insurance EXIM MTDA
Citi’s Trade Network
North America- Canada- Mexico- United States
Central & Eastern EuropeCzech Republic- Hungary- Kazakhstan- Poland- Romania- Russia- Slovakia- Turkey- Ukraine
Asia Pacific- Australia- Brunei- China- Guam- Hong Kong- Indonesia- Japan- Korea- Malaysia- New Zealand- Philippines- Singapore- Taiwan- Thailand- Vietnam
San Francisco, USA Toronto, Canada
Glendale, USA Tampa, USA
Dublin, Ireland
Penang, Malaysia
Mumbai, India
Montreal, CanadaCalgary, Canada
Processing Centers / Presentation Windows
Office Locations
7
Indian Sub-continent- Bangladesh- India- Pakistan- Sri Lanka