QUESTION
You are trade analyst working in a commercial bank. You have been approached by one of your colleagues from other departments to provide some clarifications in relation to risks in international trade financing. You are requested to answer the following interrogations-
(a) Explain the following terms used in international trade-
- Open account
- Shipping guarantee
- Avalised Bill of exchange
- ‘Dirty' bill of lading
(b) Why are incoterms important in international trade?
(c) Discuss the risks that an exporter faces when dealing on open account
(d) Explain the risk management process and the importance of reporting and communication in this process