Commercial risks are associated with an entity’s way of conducting its business and the nature of its daily activities. Companies that use and accept foreign currencies; produce, consume, and trade raw materials or primary agricultural products; utilize financial instruments with adjustable interests; or construct their operations in such a way that it results in a concentration of risks are all exposed to a variety of potentially problematic events that can result in negative business adjustments, financial losses, and failure. Depending on the nature of these risks, various management strategies can be applied to them, including the transferring of the burden to another party, reducing probability of the risk, and minimizing its possible negative effects.
KeywordsInterest Rate Foreign Currency Political Risk Forward Contract Hedging Instrument
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