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Marine Finance and Insurance - Coursework 2 - Essay Example

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The world has become one huge marketplace where businesses established in different countries all compete in the same fight. Companies in almost all…
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Marine Finance and Insurance - Coursework 2
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Download file to see previous pages Similarly, they also have come to cater to companies from other countries in the course of their business. Through it all, marine industry players have become subject to foreign exchange risks. They have engaged in deals that would involve gains or losses resulting from the fluctuations in the exchange rates of foreign currencies used.
Thus, foreign exchange risk should be acknowledged in the marine industry as a reality that all companies should be prepared for. If managed well, foreign exchange fluctuations can even present opportunities for companies to earn more. Huge capital investments for boats or similar fixed assets purchased from a foreign supplier can turn out to be big mistakes for marine companies that transacted them in a currency whose equivalent conversion to the native currency takes a nosedive right the next day or even weeks after the purchase date. The same is true with having collected revenues in currencies whose values abruptly plummets.
Indeed, such cases are not to be underestimated or overlooked. They can lead to material, negative impact on the profitability and financial soundness of any marine company. As a matter of fact, the dread of ending up as casualties of abrupt foreign exchange fluctuation has led businessmen and investors across all industries to adopt different mechanisms to mitigate such risk.
Fear and risk-aversion naturally come with things that are unpredictable, uncontrollable or unfamiliar. Risk, then, is a subject that ought to be explored and studied. If risks will be capably viewed in the right perspective by decision-makers, then strategic opportunities for growth and development will not go wasted or deliberately missed out due to attempts to avoid them.
Winning companies do not avoid having to face risks; they embrace risk-taking and then learn from it. It is important to create in the company a culture that welcomes risk-taking as part and parcel of excelling in the ...Download file to see next pagesRead More
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