Question

QUESTION 7 What risk factors should be considered specifically in relation to managing international business? Provide examples and explanation of these specific factors

Answer 1

Risk assessment is the process of identifying and analyzing risk is an ongoing international business. It is a critical component of an effective internal control system in an international business. Under it attention has to on organsiation risks at all levels and proper actions must be taken to manage. Risks can pertain to internal and external factors. When the risks are identified it must be analysed and evaluated. Management is required to regulate a constant assessment of risk and the impact on internal controls. Political, economic, industry and other environments factors impacts the international business. . Mechanisms are required to identify and react to changing conditions

International trade involves geopolitical risks, operational Risk, cultural risk, and macro-economic risk. Also the taxes and money is involved in exchange of goods and services. The risk of daily changes in exchange rates of currency affect the accounting entries for sales and purchases of firms involved in international markets. These fluctuations may create either gains or losses for particular companies. In international business there is a risk of cultural (civil unrest, strikes, etc.), environmental (natural disasters), and mechanical (poor maintenance, obsolete equipment, etc.). Example: Corruption is considered to be a subject to social construction and reconstruction for an organisation in international business. The less corrupted country is positively associated with foreign direct investment and GDP growth