Question

Describe the two most significant risks involved in international financial management.

Answer 1

Answer-

The two most significant risks involved in international financial management are

1)

Political risk - This is the most significant risk involved in international financial management as the change in leadership or the political outfit can affect te business if there are any significant change in policies. The Political instability can also affect the business adversly in a way

2)

Foreign exchange risk or Currency risk - This risk is due to change or wild swings in currency of hoe currency with respect to the foreign currency. The depreciation of the local currency relative to the foreign currency will decrease the profitability of the company to decrease if the financial reporting is done in local currency or domestic currency.

3)

Regulatory risk - The regulatory changes that are brought by the countries where the company has it's operations will affect the company in ways thta can cause the decrease in priofitability of the company. If the changes brought that favours the local companies can affect the business of foreign companies.