International Risk Paper - Essay Example

Political risk might lead to changes in many aspects of risks such as trade relationship, tax fluctuations, restrictions towards exports and imports etc. risks faced by the investors and disputes with the investors leads to risk situation both politically as well as economically. “On the developing country’s side, investment disputes in the context of international investment agreements are posing increasing risks” [United Nations Conference] .There are other risks also apart from the above mentioned economic and political risk.

Food and Agricultural Organisation of the United States –risk faced is commodity risk. One of the current issues faced by many countries in commodity markets is maintaining a balance between variable prices in the commodity markets. This results in risk of unstable prices. This kind of risks develops in countries involved in food importing. The variable prices occurs due to the difficulties faced by the importing countries in financing section and unexpected price development in international Commodity price variations might also lead to other issues such as unpredictable income and wastage of resources also.

The strategy proposed by the WTO on reducing the risk in commodity risks is focused on policies and unpredictable income. Some of the organisations particularly those dealing with production and consumer dealings have been following a variety of tools to manage the risks they are futures, options etc. Apart form this profit and loss hedging system, but that too seemed to have had very little significance towards profit argues UNCTAD.Org [2006] Government Organisations such as the Federal Reserve and the OCC also has several risk factors in their proceedings with the market, such as Credit risk, Liquidity risk, operational risk etc.

However the risks faced by OCC are current risks in the recent days . They