ITF Teachback 2: Exporter Risk Boogaloo

What are some credit risks faced by Exporters?

• Importer goes bankrupt

• Exchange rate fluctuations

• Importer rejects goods

• Documents lost in transit

• Sales contract cancellations

Answer explanation

Extract from Lesson Slides.

​ (a)   risk pertains to the ​ (b)   of ​ (c)   's country to ​remit payments in contract currency to ​ (d)   's country.​

• Importer
• Transfer
• Exporter
• Inability
• Timing
• Bank
• Credit

Answer explanation

Extract from Lesson Slides.

Which of the following are examples of Country Risk?

• Depletion of foreign reserves

• Non-payment by importer

• Strikes

• Sales contract cancellation

Answer explanation

Extract from Lesson Slides.

Exporter has more than 5 risks.

• True

• False

Answer explanation

"6, Just Like Bryan's Gyatt Level."

Match the following Risks with their definitions!

• Transfer Risk

• Pertains to any credit extended by exporter to importer

• Foreign Exchange Risk

• 1. Pertains to exchange rate fluctuations

• Documentary Risk

• 1. Political/economic actions taken by the importing/exporting country

• Country Risk

• Importer's country being unable to remit payments in the contract currency to the exporter's country

• Credit Risk

• Incomplete documentation resulting in goods being confiscated or causing unnecessary delays.

Answer explanation

"gyatt"

Which of the following is NOT a way to minimize Transport Risk?

• Engaging the service of a

  reliable carrier

• Obtaining transport insurance

  coverage

• Avoiding ridiculously cheap

  freight rates

• Invoicing sale in local

  currency

Answer explanation

Extract from Lesson Slides.

Which of the following are non-commercial risks?

• Transfer Risk

• Country Risk

• Documentary Risk

• Transport Risk

Answer explanation

"I'm Not Screenshotting This"

Which of the following is a commercial risk?

• Transfer Risk

• Credit Risk

• Documentary Risk

• Foreign Exchange Risk

Answer explanation

Extract from Lesson Slides.

What risks can be minimized by transacting on LC terms? (Arrange in alphabetical order)

b

c

d

a

e

f

Documentary Risk

Credit Risk

Country Risk

Transfer Risk

Foreign Exchange

Transport Risk

Answer explanation

"They Better Appreciate The Amount Of Effort I Spent Making This One"

Match each Risk with their appropriate solutions to minimize them!

Groups:

(a) Foreign Exchange Risk

,

(b) Credit Risk

,

(c) Transfer Risk

,

(d) Transport Risk

• Sell the foreign currency forward

• 1. Know rules and regulations of country

• 1. Ensure importer obtained the government approval to remit FX

• Invoice sale in the local currency

• Check credit worthiness of importer

• Engage services of reliable carriers

• 1. Use foreign currency options

• 1. Ask for advance payment

• 1. Avoid ridiculously cheap freight rate

• Match payables with receivables in same currency

• 1. Ensure sales contract is valid and legally enforceable

Answer explanation

"this is jus us brainfarting"