International activities of a company - Risks prevention and protection

International business requires a special approach. As soon as you cross the border, the culture, habits and ways of doing things are different. As a result, risks are heightened by this distinct environment, to which we need to conform as closely as possible.

Any assessment of risks begins with an inventory of those that may be encountered, given the company's activity and the cultural zone, whether commercial, human, logistical, financial, cultural, competitive or even random.

Within the company, it is then necessary to classify them in order to define their boundaries and determine how they can be prevented, and by whom. It's time to think about how best to avoid them.

A number of major risks can be avoided or reduced, particularly in the following cases.

Sales, whether unitary, continuous or by tender. Selling is a complex operation, and once you've crossed the border, the protective legal environment no longer exists. In most cases, the buyer's legal system will have to be used, unless we can choose one that is known and complies with international conventions (incoterms, for example). But the risk exists before the sale, right from the offer, which has to be tailored to the recipient, potential or otherwise.

A pro-forma invoice, for example, must be drawn up at least in accordance with international standards, and in the light of the political, economic and financial risks involved; this is all the more true for a call for tenders, which will require guarantees to be given.

Transport and logistics. The order has to be transported. Often, in the case of equipment in particular, the components come from different origins, either before assembly, or directly for assembly. In such cases, it's a question of controlling transport, delivery and transfer dates, all of which requires a well-honed administrative organization. You need to be familiar with the different modes of transport to different destinations, master customs operations and choose the right forwarding agent.

Customer relations and credit. The aim of all prospecting is to find a solvent customer. In addition, the portfolio must include a sufficient number of customers to ensure that the loss of one – or default on payment – does not lead to insurmountable cash flow difficulties. A major objective is therefore to adjust the composition of the customer portfolio (where possible) to reduce the consequences of a default in payment, by adapting payment and guarantee means and techniques to the customer and the country.

Dealing with commercial and political risks is therefore an ongoing concern for exporters.

Financial and currency...