Commercial risk

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Revision as of 18:09, 11 April 2015 by imported>Doug Williamson (Link with business risk and expand page to clarify the linkages.)
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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.


Commercial activities

More generally, commercial risks are risks arising directly from, or in the context of, the commercial activities of the business.

Commercial risks are the business risks in which the organisation considers it has a core competency, and therefore chooses to accept and manage in the expectation of superior average returns over time.


See also