Naslov (eng)

Exchange rate risk insurance

Autor

Bjelić, Predrag
Petrović, Vesna
Popović Petrović, Ivana

Publisher

Opis (eng)

International trade is a very dynamic business activity connected to all sorts of risks due to its transnational character. Doing business across national borders carries additional risks compared to a business that operates on a single national market. These additional risks include differences in legal regimes and business climate, different currencies, business language differences, cultural differences of businessmen, etc. That is why many business authors see internationalisation of a company as a big leap forward in its business development, but also connected to greater risks. But greater risks are almost always connected to greater profits, and that is the main stimulation of companies to do business abroad. International businesses usually face two groups of risks: commercial risks and non-commercial risks. Commercial risks are connected to the economic factors of business operations and can include risks of lost payments, bankruptcy risks, foreign exchange rate risks, etc. All of these risks are a part of normal business activity, and companies are able to successfully deal with them. Non-commercial risks, in contrast, are based on non-economic factors like political, cultural, ecological, etc. These risks are more unpredictable and are not directly linked to a business activity, but their effects on international business activity can be significant. Many companies are not prepared and able to avoid and survive noncommercial risks, and the help of other institutions, like banks, is absent in the case of these risks. On certain occasions, states are prepared to help their companies deal with non-commercial risks. Examples of this help are financing and insurance of export credits by state export credit agencies. But the greatest risk in international business comes from exchange rate flactuations that couses sevier risk. If a company earns a profit in international business in one currency, it can siverely decrease this profit, or even have a loss, in exchanging the profits to another currency, due to a high decrease of value of the first currency. We call this risk exchange rate risk. In our chapter, we will define exchange rate risk and present the literature review on this subject. We will also describe macroeconomic, as well as microeconomic, instruments that can help companies to be insured against exchange rate risks in international trade.

Jezik

engleski

Datum

2025

Licenca

Ovo delo je licencirano pod uslovima licence
Creative Commons CC BY-NC-ND 4.0 - Creative Commons Autorstvo - Nekomercijalno - Bez prerada 4.0 International License.

http://creativecommons.org/licenses/by-nc-nd/4.0/legalcode

Predmet

Key words: insurance, exchange rate, risks, international business

Deo kolekcije (1)

o:28218

Ekonomski fakultet