International business risks to look out for
Running your business internationally comes with many new opportunities, but there are also potential risks in international business. There are a number of strategies you can follow in order to minimise risks when conducting business internationally, but first, you must understand the challenges your business could be exposed to. Join us as we explore these common international business risks, and how to avoid them.
Regulatory
This type of risk in international business occurs when a change of regulations or rules is made by the government, which could impact how your business operates. This includes increasing the costs of operating your business and causing a change to administrative processes. To minimise these risks, it is important to ensure that you and your team stay up to date about potential regulatory changes, so that you can begin to put mitigating measures in place.
Cultural
Cultural changes that can be a risk for your international business include differing etiquette, customer preferences and language barriers, which could impact communications with customers, clients and suppliers. Staying open to new ways of working alongside different cultures can expand your knowledge, and also open doors to more opportunities for your international business. To combat any potential issues, ensure you have an understanding of business practices in other countries, and where necessary source reliable translators to make sure nothing is lost in translation.
Commercial
Both cultural and regulatory issues can cause commercial risks for your international business. Commercial risks occur when there is a potential loss of profit when dealing with a trading partner. This can mean they can’t pay what they owe your business or are not meeting the requirements which were stated in the initial agreement. Whilst any business may face these issues, they can be exemplified by dealing with international companies, due to regulations, cultures, currencies and languages.
Cyber
Transferring data across different countries can be extremely risky, with cyberhackers able to intercept the data when crossing the borders. Your business’s private information needs to be protected, so your business’s data is not breached as this can lead to lost money and possibly defamation. Updated and frequently reviewed security measures is one way to stay on top of your international business risk management. There are some common, essential security measures to consider such as using two-factor authentication, controlling individual access levels, implementing effective firewalls and adopting intrusion detectors to track unusual system activity.
