Just as there are reasons to enter global markets and the benefits of global markets, there are also risks involved in locating companies in certain countries. Each country can have its potentialities; it also has its problems associated with doing business with large companies. Some of the rogue countries may have all the natural minerals, but the risks involved in doing business in those countries outweigh the benefits. Some of the risks in international business are:

(1) Strategic Risk

(2) Operational Risk

(3) Political Risk

(4) Country Risk

(5) Technological Risk

(6) Environmental Risk

(7) Economic Risk

(8) Financial Risk

(9) Terrorism risk

Strategic Risk: The ability of a company to make a strategic decision in order to respond to forces that are a source of risk. These forces also affect a company’s competitiveness. Porter defines them as: threat from new entrants into the industry, threat from substitute goods and services, intensity of competition within the industry, bargaining power of suppliers, and bargaining power of consumers.

Operational Risk: It is caused by assets and financial capital that help in day-to-day business operations. The breakdown of machinery, the supply and demand of resources and products, the shortage of goods and services, the lack of perfect logistics and inventory will lead to inefficiency of production. By controlling costs, unnecessary waste will be reduced and process improvement can improve lead time, reduce variation and contribute to efficiencies in globalization.

Political Risk – Political actions and instability can make it difficult for businesses to operate efficiently in these countries due to negative publicity and the impact created by individuals in higher government. A business cannot effectively operate at its full capacity to maximize profits in the political turbulence of such an unstable country. A new, hostile government can replace the friendly one and thus expropriate foreign assets.

Country Risk: The culture or instability of a country can create risks that can make it difficult for multinational companies to operate safely, effectively and efficiently. Some of the country risks stem from government policies, economic conditions, security factors, and political conditions. Solving one of these problems without all the (aggregated) problems together will not be enough to mitigate country risk.

Technological risk: lack of security in electronic transactions, the cost of developing new technologies and the fact that these new technologies can fail, and when all this is combined with existing obsolete technology, the result can create a dangerous effect on business . on the international stage.

Environmental risk: Air, water and environmental pollution can affect the health of citizens and cause public protests by citizens. These problems can also lead to reputational damage for companies doing business in that area.

Economic Risk: This comes from the inability of a country to meet its financial obligations. The change in foreign investment and/or domestic fiscal or monetary policies. The effect of the exchange rate and the interest rate make it difficult to carry out international business.

Financial Risk: This area is affected by the exchange rate of the currency, the flexibility of the government to allow companies to repatriate profits or funds outside the country. Devaluation and inflation will also affect the company’s ability to operate at an efficient capacity and remain stable. Most countries make it difficult for foreign companies to repatriate funds, forcing these companies to invest their funds at a less than optimal level. Sometimes the assets of companies are confiscated and that contributes to financial losses.

Risk of Terrorism: These are attacks that can come from the lack of hope; confidence; differences in culture and religious philosophy, and/or simply hatred of companies by citizens of the host countries. It leads to possible hostile attitudes, sabotage of foreign companies and/or kidnapping of employers and employees. Such frustrating situations make it difficult to operate in these countries.

While the benefits in international business outweigh the risks, companies should conduct a risk assessment of each country and also include intellectual property, bureaucracy and corruption, human resource constraints, and property restrictions in the analysis. So consider all the risks involved beforehand. venture into any of the countries.