Commercial risk

1. International trade. Commercial risk arises from a foreign business partner’s insolvency or unwillingness to pay its debt or to perform according to the contract. For example the insolvency or unwillingness of a bank, customer, supplier or guarantor.

Letters of credit and documentary collections can provide some measure of protection against commercial risks of this kind.

2. More generally, risk arising directly from, or in the context of, the commercial activities of the business.

See also

• Documentary collection
• Letter of credit