International trade is currently at its peak thanks to globalization of trade and the interdependence of international trade partners. However, all is not smooth sailing. International trade has its fair share of risks especially when trading with developing nations or countries that have unstable political rule. Although trading must continue with these partners, you should take extra precaution to ensure the political risk associated with these types of trade does not sink your business in the process. This is why working with a Political Risk Insurance Company NTC is so important. Such a collaboration can help you avoid the following:
Risk of defaulted payment upon delivery of goods
One of the most dire political risks any business can face, and might face at one point, is defaulted payment. You negotiate with your trading partners and agree on a trade schedule. However, after delivering on your end and sending the agreed goods, the buyer in the other country fails to complete payment. Be it due to systemic reasons or political turmoil, defaulted payments can sink your business to a point of no recovery. However, with political risk insurance, you can get due compensation and manage to keep your business afloat.
Risk of goods getting lost upon shipping
Another political trading risk is that of goods going missing after you have dispatched them from your end. Such occurrences can take place due to events such as civil strife, political corruption, politically-instigated insecurity and many other closely related factors. Depending on the trade agreements in place, such an eventuality could thrust your business into a trade conflict and the possibility of having to pay compensation for any paid money. Political Risk Insurance Company NTC can help you avoid this by providing professional trade consultation and compensation.
Risk of goods getting damaged due to insecurity or political unease
Trading with unstable countries can also lead to your goods getting damaged while in transit or under storage. This could be due to factors such as poor quality assessment or political conflict. Such a risk can force you to pay penalties for not delivering what was agreed upon with your trading partners. You could also end up losing all your investment if the buyer refuses to accept the consignment.
Risk of government interference
Unstable countries such as the developing countries are also known to have governments that sometimes interfere with the free market. Such governments can put in place punitive trade measures or impose policies that make it very expensive to do business. In other cases, the government or parties allied to it can interfere with contract agreements, thereby resulting in your business incurring heavy losses for delivered or ordered goods.
Risk of foul play or sabotage
Sometimes political risks are more direct. For example, your business or your trade goods could get directly targeted by competitors or criminal groups. This can lead to attacks such as blackmail, sabotage or intimidation. Without a Political Risk Insurance Company NTC to help you, such acts could end up ruining your company’s reputation and causing massive losses in investments or capital.