Mitigating Techniques for Commercial Risk - Revision history

wikademia>Dr. Eme: moved Archive:Mitigating Techniques for Commercial Risk to Mitigating Techniques for Commercial Risk over redirect

2009-08-12T19:27:51Z

moved Archive:Mitigating Techniques for Commercial Risk to Mitigating Techniques for Commercial Risk over redirect

← Older revision	Revision as of 19:27, 12 August 2009
(No difference)

wikademia>Wikademia: moved Mitigating Techniques for Commercial Risk to Archive:Mitigating Techniques for Commercial Risk

2009-05-25T23:19:14Z

moved Mitigating Techniques for Commercial Risk to Archive:Mitigating Techniques for Commercial Risk

← Older revision	Revision as of 23:19, 25 May 2009
(No difference)

wikademia>Wikademia at 18:01, 12 April 2009

2009-04-12T18:01:36Z

← Older revision		Revision as of 18:01, 12 April 2009
Line 67:		Line 67:
	*[[Mitigating Techniques for Commercial Risk/Activities\|Activities]]		*[[Mitigating Techniques for Commercial Risk/Activities\|Activities]]
	*[[Mitigating Techniques for Commercial Risk/Assessment\|Assessment]]		*[[Mitigating Techniques for Commercial Risk/Assessment\|Assessment]]



	'''Correlation''': Materials from this unit correlate with [http://www.nasbitecgbp.org NASBITE CGCP]'s Knowledge Statement 04/03/05: Knowldege of mitigating techniques (e.g., credit risk insurance from Overseas Private Investment Corporation (OPIC) and U.S. Export-Import (Ex-Im) Bank)

	<div style="float:right;">[[Mitigating Techniques for Commercial Risk/Commercial Banks-Mitigation\|Next]]		<div style="float:right;">[[Mitigating Techniques for Commercial Risk/Commercial Banks-Mitigation\|Next]]
	[[Category:International business]]		[[Category:International business]]

wikademia>Wikademia at 18:01, 12 April 2009

2009-04-12T18:01:23Z

← Older revision		Revision as of 18:01, 12 April 2009
Line 1:		Line 1:
	{{ntnes}}		{{ntnes}}


	~~==Unit 3.5- Mitigating Techniques for Commercial Risk==~~

	This lesson discusses what an international credit manager might do to mitigate the risk of nonpayment and when to do it. An international credit manager, to be successful in global business, needs to be able to identify and describe techniques for managing nonpayment risk.		This lesson discusses what an international credit manager might do to mitigate the risk of nonpayment and when to do it. An international credit manager, to be successful in global business, needs to be able to identify and describe techniques for managing nonpayment risk.

wikademia>Wikademia: Text replace - 'TF3.5' to 'ntnes'

2009-04-10T17:24:00Z

Text replace - 'TF3.5' to 'ntnes'

← Older revision		Revision as of 17:24, 10 April 2009
Line 1:		Line 1:
	{{~~TF3.5~~}}		{{ntnes}}

wikademia>Wikademia: Text replace - 'Category:International Business' to 'Category:International business'

2009-04-09T05:16:31Z

Text replace - 'Category:International Business' to 'Category:International business'

← Older revision		Revision as of 05:16, 9 April 2009
Line 77:		Line 77:

	<div style="float:right;">[[Mitigating Techniques for Commercial Risk/Commercial Banks-Mitigation\|Next]]		<div style="float:right;">[[Mitigating Techniques for Commercial Risk/Commercial Banks-Mitigation\|Next]]
	[[Category:International ~~Business~~]]		[[Category:International business]]

wikademia>Wikademia: 3 revisions

2009-04-08T04:18:23Z

3 revisions

← Older revision	Revision as of 04:18, 8 April 2009
(No difference)

24.11.195.94 at 13:11, 28 September 2007

2007-09-28T13:11:20Z

← Older revision		Revision as of 13:11, 28 September 2007
Line 76:		Line 76:
	'''Correlation''': Materials from this unit correlate with [http://www.nasbitecgbp.org NASBITE CGCP]'s Knowledge Statement 04/03/05: Knowldege of mitigating techniques (e.g., credit risk insurance from Overseas Private Investment Corporation (OPIC) and U.S. Export-Import (Ex-Im) Bank)		'''Correlation''': Materials from this unit correlate with [http://www.nasbitecgbp.org NASBITE CGCP]'s Knowledge Statement 04/03/05: Knowldege of mitigating techniques (e.g., credit risk insurance from Overseas Private Investment Corporation (OPIC) and U.S. Export-Import (Ex-Im) Bank)

	<div style="float:right;">[[Mitigating Techniques for Commercial Risk/Commercial Banks ~~and~~ Mitigation\|Next]]		<div style="float:right;">[[Mitigating Techniques for Commercial Risk/Commercial Banks-Mitigation\|Next]]
	[[Category:International Business]]		[[Category:International Business]]

24.11.195.94 at 13:10, 28 September 2007

2007-09-28T13:10:22Z

← Older revision		Revision as of 13:10, 28 September 2007
Line 76:		Line 76:
	'''Correlation''': Materials from this unit correlate with [http://www.nasbitecgbp.org NASBITE CGCP]'s Knowledge Statement 04/03/05: Knowldege of mitigating techniques (e.g., credit risk insurance from Overseas Private Investment Corporation (OPIC) and U.S. Export-Import (Ex-Im) Bank)		'''Correlation''': Materials from this unit correlate with [http://www.nasbitecgbp.org NASBITE CGCP]'s Knowledge Statement 04/03/05: Knowldege of mitigating techniques (e.g., credit risk insurance from Overseas Private Investment Corporation (OPIC) and U.S. Export-Import (Ex-Im) Bank)

			<div style="float:right;">[[Mitigating Techniques for Commercial Risk/Commercial Banks and Mitigation\|Next]]
	[[Category:International Business]]		[[Category:International Business]]

wikademia>MSUglobal: New page: {{TF3.5}} ==Unit 3.5- Mitigating Techniques for Commercial Risk== This lesson discusses what an international credit manager might do to mitigate the risk of nonpayment and when to do i...

2007-09-25T16:37:56Z

New page: {{TF3.5}} ==Unit 3.5- Mitigating Techniques for Commercial Risk== This lesson discusses what an international credit manager might do to mitigate the risk of nonpayment and when to do i...

New page

{{TF3.5}}

==Unit 3.5- Mitigating Techniques for Commercial Risk==

This lesson discusses what an international credit manager might do to mitigate the risk of nonpayment and when to do it. An international credit manager, to be successful in global business, needs to be able to identify and describe techniques for managing nonpayment risk.

There are four types of reactions to risk situations that a seller or exporter can take regarding nonpayment by the buyer:
*Avoidance: Don’t sell on credit.

*Transference: Ask a third party to assume the risk, such as a buyer’s bank.

*Mitigation: Take precautions that reduce the probability that nonpayment will occur, such as performing a complete credit check.

*Acceptance: Establish a contingency allowance for nonpayment accounts.

Sellers will use all of the above depending on the buyer and the specific circumstances associated with the sale. This section provides a brief summary of the following techniques used for responding to and managing the risk of nonpayment.

{| class="wikitable"
|-
! Technique
! Type of Risk Response Summary
|-
| Commercial Banks
| Mitigation - By involving the bank and asking them to provide the payment, a seller is mitigating risk. It may also seem like a risk transfer, but there is a country risk that the buyer’s bank may default. For example, if a bank is located in a country that becomes insolvent or suffers some other economic or political change, the bank of the buyer could be unable to meet its obligations.
|-
| Accounts Receivable Financing
| Transference or Mitigation - Risk is transferred if the loan is set up to allow the financing company to go after a buyer in the event of nonpayment. Risk is mitigated when only a percent of the accounts receivable is covered.
|-
| Governments
| Transference - An Export Credit Agency (ECA) provides insurance or loan guarantees through that country’s financial institution and will share any losses with the bank which actually provides the financing since the government guarantees the bank financing in the event of a nonpayment, depending on the agreement between the ECA and their country’s banks.
|-
| Factoring
| Transference - Similar to accounts receivable financing. Here a seller gets money, and the factor company assumes the responsibility to collect from a buyer.
|-
| Forfaiting
| Transference - The purchasing of an exporter's (seller’s) receivables (the amount a buyer or importer owes the exporter or seller) at a discount by paying cash. The forfaiter, the purchaser of the receivables, becomes the entity to whom the importer or buyer is obliged to pay its debt.
|-
| Countertrade
| Acceptance - Countertrade acknowledges that payment by money is probably not going to take place. Using countertrade as payment provides other benefits to a seller, which in the long run, may yield future payments and advantages in the market.
|-
| Bankers' Acceptances
| Transference – A seller gets money from the buyer’s bank.
|-
| Credit Insurance
| Mitigation - Credit insurance covers a buyer’s failure to meet the debt obligation on time due to protracted default (slow pay) or insolvency. In the event of a claim, the insured provides the insurer with all documentation of the transaction and, once validated by the insurer, receives payment less any agreed retention, such as coinsurance and/or deductible and negotiated fees.
|}

===Unit Objective===
The goal of this material is to introduce you to mitigating techniques for commercial risk associated with international transactions.
By the end of this unit you will be able to
*identify techniques for mitigating commercial risk.
*identify when to use each technique.

===Unit Outline===
*[[Mitigating Techniques for Commercial Risk|Introduction]]
*[[Mitigating Techniques for Commercial Risk/Commercial Banks-Mitigation|Commercial Banks-Mitigation]]
*[[Mitigating Techniques for Commercial Risk/Loans|Loans]]
*[[Mitigating Techniques for Commercial Risk/Letter of Credit|Letter of Credit]]
*[[Mitigating Techniques for Commercial Risk/Documentary Draft Collection|Documentary Draft Collection]]
*[[Mitigating Techniques for Commercial Risk/Accounts Receivable Financing-Transference or Mitigation|Accounts Receivable Financing-Transference or Mitigation]]
*[[Mitigating Techniques for Commercial Risk/Governments-Transference|Governments-Transference]]
*[[Mitigating Techniques for Commercial Risk/Factoring-Transference|Factoring-Transference]]
*[[Mitigating Techniques for Commercial Risk/Forfaiting-Transference|Forfaiting-Transference]]
*[[Mitigating Techniques for Commercial Risk/Banker's Acceptances-Transference|Banker's Acceptances-Transference]]
*[[Mitigating Techniques for Commercial Risk/Credit Insurance-Mitigation|Credit Insurance-Mitigation]]
*[[Mitigating Techniques for Commercial Risk/Summary|Summary]]
*[[Mitigating Techniques for Commercial Risk/Resources|Resources]]
*[[Mitigating Techniques for Commercial Risk/Activities|Activities]]
*[[Mitigating Techniques for Commercial Risk/Assessment|Assessment]]

'''Correlation''': Materials from this unit correlate with [http://www.nasbitecgbp.org NASBITE CGCP]'s Knowledge Statement 04/03/05: Knowldege of mitigating techniques (e.g., credit risk insurance from Overseas Private Investment Corporation (OPIC) and U.S. Export-Import (Ex-Im) Bank)

[[Category:International Business]]