Transfer Risk

In: Historical Events

Submitted By TiarraPayne
Words 296
Pages 2
Transfer Risk

Definition:
Probability of loss due to currency conversion (exchange) restrictions imposed by a foreign government that make it impossible to move money out of the county. It is a type of political risk.

Summary:
Transfer risks is a large factor in international business and currency trading alike. Transfer risk may be associated with changes in currency value, currency exchange restrictions, the value of a given set of goods, and more. Many businesses keep a reserve of cash, often referred to as a transfer risk reserve, to deal with these issues. Transfer risk can affect the value of funds, made in another country, upon conversion. Transfer risk can also effect other parts of the deal. Transfer risk can be cause by surprising restrictions on the amount of money pulled out of a country, the value of the goods which a company imports or exports money and more.

Discussion:
Transfer risk also explained as the risk of transferring money across the borders, has many implications. For currency traders, transfer risk mainly effects the value of a trade they have or were going to make. This could cause the trader to loose percentage of any unit. For companies doing commerce across boarder transfer risk is more comprehensive. When a company does business internationally it is subject to the regulations of that government. So the company can quickly experience changes in banking regulations, commerce regulations, port laws and much more than that. In this way, transfer rick can become a substantial variable which could lead to failure of the business as a whole.

Reference
Wilkinson, J. (2013, July 24). Transfer Risk. Retrieved July 15, 2015.

Gray, A. (2013, December 9). Risk-Transfers. Retrieved July 15, 2015.

Gray, A. (2013, December 9). Risk-Transfers. Retrieved July 15,…...

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