Question

What are the Economic and Financial risks in order to conduct international business in India. & what are the strategies to control economic or financial risks in India?( 500 words report)

Answer 1

Risk happens on account of uncertainty regarding happening of an occasion like loss, damage, variations in exchange rates, charge per unit variations, etc. each business manager is often risk averts, example- managers sometimes don't need to require risk. Hence, he likes to figure out higher likelihood for making wealth and profit. He likes to figure as hedger. the chance taker would love to require risk. He usually works as speculator. Any modification within the business surroundings, would bring a similar form of risk. Generally, the aras of business susceptible to risks are shortage of inventory, shortage of business orders, shortage of force, shortage of utilities like power and fuel, changes in government policies, etc.

The risk concerned in conducting international business in India-

1-Exposure could be a live of the sensitivity of the worth of a money item (cash flow, assets, liability etc.) to changes in variables like exchange rates, etc., whereas risk could be a live of the variability of the worth of the money item.

2- The appreciation of native|an area|a neighborhood} currency leads to decreasing the local currency worth with relevancy exports due denominated in foreign currency. Such appreciation or depreciation of native currency makes result on the income of domestic currency thanks to the transactions’ exposure of merchandise and non-merchandise exports and imports.

3- Limits on foreign possession stay, significantly given opposition from native business communities. Legislation is advanced and implementation is commonly delayed as politicians request to appease totally different citizen teams.

The strategies to control financial risk are-

1- Financial risk management is a method to deal with the uncertainties ensuing from monetary markets. It involves assessing the monetary risks facing associate degree organization and developing management ways consistent with internal priorities and policies.

2- Addressing monetary risks proactively could offer associate degree organization with a competitive advantage. It additionally ensures that management, operational workers, stakeholders, and therefore the board of administrators square measure in agreement on key problems of risk.

3- Derivatives square measure listed wide among monetary establishments and on organized exchanges. The price of derivatives contracts, such as futures, forwards, options, and swaps, comes from the worth of the underlying quality. Derivatives trade on interest rates, exchange rates, commodities, equity and stuck financial gain securities and crdit