Buyer's Risks/Assessment

Assessment
1. Which of the following approaches to assessing country risk is most likely to reduce overall company risk?
 * a. Using a systematic approach to assure a consistent, relevant, and objective assessment
 * b. Relying on briefings about anticipated “global trends” from experts in international affairs
 * c. Talking to someone in the company who has some knowledge of the country from a prior visit
 * d. Rating each country according to a pre-established criteria set to assure fairness

2. Political risk is best defined as the inability of a foreign customer to pay its debts in full and on time as a result of
 * a. a change in the currency exchange rates.
 * b. actions of their government.
 * c. a failure of the banking system.
 * d. lack of funds in the customer’s account.

3. After the recent election in your buyer’s country the currency was drastically devalued, which will make it difficult for your buyer to pay you on time. This would be considered
 * a. commercial risk.
 * b. country risk.
 * c. economic risk.
 * d. political risk.

4. Your new international customer has been in business for less than one year and is owned by an individual with little industry experience. When evaluating your risk, this customer shows significant
 * a. country risk.
 * b. commercial risk.
 * c. economic risk.
 * d. political risk.

(Correct answers: 1=a, 2=b, 3=c, 4=b.)