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Archive:Introduction to Political and Economic Risk/Economic Risks

2008-11-24T21:34:15Z

217.24.240.7: /* Convertibility Risk */

{{TF1.1}}

==Economic Risk==
Economic risks can endanger the ability of a seller to get payment for goods or services in many ways. This type of risk can sometimes be forecast but is often completely out of the control of either the buyer or seller. Purchasing transaction insurance is essential for a buyer to minimize economic risk. Elements of economic risk include but are not limited to:

*convertibility risk
*foreign exchange risk
*translation risk
*central bank activities (interest rate fluctuation, availability of funds)
*economic indicator movement (GDP, unemployment, purchasing power, inflation, etc.)

===Convertibility Risk===
Convertibility risk is an issue when a buyer has received the goods promised and is now ready to make payment but can’t because, for any number of possible reasons, the buyer’s government bars the conversion of its local currency to that of any other country. The reasons for this action could be a possible war, a major building infrastructure program, or a massive negative trade balance. The buyer naturally has the currency of his own country in his bank account. When the buyer goes to the bank to exchange the local currency to the currency specified in the purchase contract or to the currency of the seller’s country – or for that matter the currency of any “hard currency” country, the conversion cannot be made without proper authorization. Convertibility risks usually occur when the buyer’s currency does not have a ready world market. Although the transfer of the local currency out of the buyer’s country may not have been specifically barred, it provides little value since the seller may not be able to find a buyer for the funds.

===Foreign Exchange Risk===
Foreign exchange risk is not the same as either transfer risk or convertibility risk. Foreign exchange risk occurs when the rate of exchange between the seller’s currency and the buyer’s currency changes dramatically between the time the order is quoted and the time the final payment is received. When payment is not made in a cross-border transaction, the difficulty of collection can be compounded significantly, especially if the transaction is hedged. Therefore, it is much better to assess the level of risk and know ways to mitigate, manage, transfer or accept the risks.

For example, a seller and buyer agree that the seller will be paid in the seller’s currency. The buyer has the financial strength and character at the time of the contract to be willing and able to make payment when the goods are delivered. Between the time the order is placed and the time the buyer is to make payment, however, the buyer’s currency drops significantly in value against the seller’s currency. The cost of the goods may now be more than the profit margin of the buyer, or the buyer may have to pay much more than anticipated in the buyer’s local currency. It may take the buyer much more time to obtain enough local currency to buy enough of the seller’s currency to make full payment. It may be that the buyer will never be able to make a full payment for the purchase. Hedging against foreign exchange risk is the best solution for this type of problem.

===Translation Risk===
Translation risk involves the revaluation of foreign assets that are held in a foreign currency. There may be a difference in the current foreign exchange rate from the time of the original transaction to time of the fulfillment of the sales contract. Assets held on the balance sheet in foreign currency must periodically be revalued to the current market price of that currency. This kind of revaluation to the current market will create an exchange loss or gain. This exchange gain or loss is unrealized but still impacts the value of the assets held overseas. An example follows:

Plant and equipment of an international company are marked to market at year-end for financial reporting purposes. Conditions throughout the year have caused a decline in the value of the currency of their foreign holdings of 20%. This decline has the immediate affect of reducing the value of these assets by 20%, which then has the direct impact of reducing the company’s profitability for the year by the same value even though no direct transaction has occurred other than the revaluation to create this loss.

<div style="float:right;">[[Introduction to Political and Economic Risk/Country-Related Risks|Prev]] | [[Introduction to Political and Economic Risk/Cultural Risks|Next]]

[[Category:International Business]]

Archive:Introduction to Political and Economic Risk/Economic Risks

2008-11-24T21:27:04Z

217.24.240.7: /* Convertibility Risk */

{{TF1.1}}

==Economic Risk==
Economic risks can endanger the ability of a seller to get payment for goods or services in many ways. This type of risk can sometimes be forecast but is often completely out of the control of either the buyer or seller. Purchasing transaction insurance is essential for a buyer to minimize economic risk. Elements of economic risk include but are not limited to:

*convertibility risk
*foreign exchange risk
*translation risk
*central bank activities (interest rate fluctuation, availability of funds)
*economic indicator movement (GDP, unemployment, purchasing power, inflation, etc.)

===Convertibility Risk===
Convertibility risk is an issue when a buyer has received the goods promised and is now ready to make payment but can’t because, for any number of possible reasons, the buyer’s government bars the conversion of its local currency to that of any other country. The reasons for this action could be a possible war, a major building infrastructure program, or a massive negative trade balance. The buyer naturally has the currency of his own country in his bank account. When the buyer goes to the bank to exchange the local currency to the currency specified in the purchase contract or to the currency of the seller’s country – or for that matter the currency of any “hard currency” country, the conversion cannot be made without proper authorization. Convertibility risks usually occur when the buyer’s currency does not have a ready world market. Although the transfer of the local currency out of the buyer’s country may not have been specifically barred, it provides little value since the seller may not be able to find a buyer for the funds.
,m,m/,.

===Foreign Exchange Risk===
Foreign exchange risk is not the same as either transfer risk or convertibility risk. Foreign exchange risk occurs when the rate of exchange between the seller’s currency and the buyer’s currency changes dramatically between the time the order is quoted and the time the final payment is received. When payment is not made in a cross-border transaction, the difficulty of collection can be compounded significantly, especially if the transaction is hedged. Therefore, it is much better to assess the level of risk and know ways to mitigate, manage, transfer or accept the risks.

For example, a seller and buyer agree that the seller will be paid in the seller’s currency. The buyer has the financial strength and character at the time of the contract to be willing and able to make payment when the goods are delivered. Between the time the order is placed and the time the buyer is to make payment, however, the buyer’s currency drops significantly in value against the seller’s currency. The cost of the goods may now be more than the profit margin of the buyer, or the buyer may have to pay much more than anticipated in the buyer’s local currency. It may take the buyer much more time to obtain enough local currency to buy enough of the seller’s currency to make full payment. It may be that the buyer will never be able to make a full payment for the purchase. Hedging against foreign exchange risk is the best solution for this type of problem.

===Translation Risk===
Translation risk involves the revaluation of foreign assets that are held in a foreign currency. There may be a difference in the current foreign exchange rate from the time of the original transaction to time of the fulfillment of the sales contract. Assets held on the balance sheet in foreign currency must periodically be revalued to the current market price of that currency. This kind of revaluation to the current market will create an exchange loss or gain. This exchange gain or loss is unrealized but still impacts the value of the assets held overseas. An example follows:

Plant and equipment of an international company are marked to market at year-end for financial reporting purposes. Conditions throughout the year have caused a decline in the value of the currency of their foreign holdings of 20%. This decline has the immediate affect of reducing the value of these assets by 20%, which then has the direct impact of reducing the company’s profitability for the year by the same value even though no direct transaction has occurred other than the revaluation to create this loss.

<div style="float:right;">[[Introduction to Political and Economic Risk/Country-Related Risks|Prev]] | [[Introduction to Political and Economic Risk/Cultural Risks|Next]]

[[Category:International Business]]

Archive:Miroslav Mišković

2007-04-24T07:09:24Z

217.24.24.15: /* References */

{{Infobox Celebrity
| name = Miroslav Mišković
| image =
| caption =
| birth_date = [[June 5]], [[1945]]
| death_date =
| death_place =
| occupation = [[President]], [[Delta Holding]]
| networth = {{gain}} $1.5 billion [[USD]], [http://najbogatsieuropejczycy.wprost.pl The list of the 100 richest persons in the post-communist countries]
| spouse =
| website =
| footnotes =
}}
'''Miroslav Mišković''' ([[Serbian language|Serbian]] [[Cyrillic]]: '''Мирослав Мишковић''') (born [[July 5]], [[1945]] in [[Kruševac]], [[Serbia]]) is a [[Serbia]]n [[businessman]], the owner of the [[Delta Holding]] company. He is considered to be the second richest person in Serbia, behind [[Philip Zepter]], with his wealth estimated at approximately [[Dollar|$]]1.5 billion as of [[2006]], according to the list of 100 wealthiest persons of the post-communist countries made by [[Poland|Polish]] magazine ''[[Wprost]].''<ref>[http://najbogatsieuropejczycy.wprost.pl The wealthiest in post-communist countries]</ref> Mišković holds the 38th place of this list, but is on the fourth place among the [[tycoon]]s outside former [[Soviet Union]]. According to [[List of billionaires (2007) 100-946|2007 list of the richest people in the world]], published annually by [[Forbes|Forbes magazine]], Mišković is a newcomer to this list, taking the 891st spot, with networth of [[Dollar|$]]1 billion. He is the first person to come on to this list from Serbia.<ref>[http://www.forbes.com/lists/2007/10/07billionaires_Miroslav-Miskovic_CVDZ.html 2007 Forbes' annual billionaires' list]</ref>

Mišković was born in [[Kruševac]], where he had graduated, before moving to [[Belgrade]], where he gained his faculty diploma in [[economy]] in [[1971]]. Afterwards, he has worked in [[Jugobanka]] and [[Trajal]] in Kruševac until [[1977]], when he moved to [[Župa Chemical Industries]], where he became financial director in [[1984]] and the [[Chief executive officer|chief executive]] of the company in [[1987]], and he had remained on this position until [[1990]], when he became a vicepresident of the Serbian government, but has remained on this position for only six months. Meanwhile, Mišković has founded Delta M company (Delta M being a sort of abbreviation of his initials - ''double M''), a company that became very successful in the following years, during [[Yugoslav wars]] and under the regime of [[Slobodan Milošević]]. Soon afterwards, he has founded [[Banca Intesa Beograd|Delta banka]] (sold to [[Banca Intesa]] in [[2005]]), that was to become the first part of Mišković's extremely successful [[Delta Holding]] corporation that works in agribusiness, retail, distribution, financial brokerage, real estate development and insurance.

Mišković's connection to [[Slobodan Milošević]] has never been obvious, except for the fact that he was a vice-president of the Government. After the [[5th October Overthrow|overthrow of Milošević's regime]], Mišković was linked to [[Dušan Mihajlović]], the minister of police at the time and the other leaders of [[Democratic Opposition of Serbia]]. Mišković is today considered to be an important political figure with high influence on the leading politicians in Serbia.

Mišković was kidnapped [[April 9]], [[2001]], but was released the next day, as the ransom money (estimated at about 7,000,000 [[German mark]]s at the time) was paid 18 hours later. After the assassination of the Serbian prime minister [[Zoran Đinđić]] [[March 12]], [[2003]], the abduction of Mišković was attributed to the same group that has been found responsible for the death of the prime minister, which has made other connections of the two crimes seem possible.

==References==
<div class="references-small">
<references/>
</div>
M was originaly initiale of Milošević son Marko Miloševic

==External links==
* [http://www.b92.net/info/kojeko/miskovic.php Mišković's biography at B92.net] (in Serbian)
* [http://www.serbian-business-club.co.yu/biografije/miskovic-deltaholding.htm Mišković's biography at Serbian Business Club.co.yu] (in Serbian)
* [http://www.vreme.com/cms/view.php?id=449550 Mišković's biography at Vreme.com] (in Serbian)
* [http://najbogatsieuropejczycy.wprost.pl The list of the 100 richest persons in the post-communist countries at Wprost.pl]

{{DEFAULTSORT:Miskovic, Miroslav}}

[[Category:1945 births]]
[[Category:Living people]]
[[Category:Businesspeople]]
[[Category:Delta Holding]]
[[Category:Billionaires]]
[[Category:Kidnappings]]

[[sr:Мирослав Мишковић]]