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Risk Management

Taking the holistic approach

Risk Management

Internal Audit

Five major drivers

Internal Audit

Islamic Banking and Finance

Interpretation & Implementation

Islamic Banking & Finance

Banking

Banking Regulation and Business

Banking

Treasury and Capital Markets

Market and Liquidity Risk

Treasury & Capital Markets

Financial Crime

Don't be scared, be prepared

Financial Crime
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International Trade Finance

An analysis of a typical credit portfolio at any bank will reveal that in general over 50% of all companies are involved in cross-border trade to one degree or another.

Buying and selling goods and services outside of the domestic market place presents corporate entities, and the banks and financial institutions that provide support to these businesses, with a unique set of risk considerations and challenges in addition to the buyer defaulting.

The ultimate objective of any trading company is to get paid. It is the very reason that buyers and sellers conduct business together.

Equally the prime objective of a bank and financial institution is to ensure that any finance that they provide to their clients in support of international trade is repaid in full and on time and that the transaction is profitable.

Irrespective of the potentially opposing needs and risk profiles of a bank and its client in a cross-border transaction, international trade finance mechanisms and procedures can provide risk mitigation techniques and additional comfort and security to all parties.

Needs of corporate entities trading internationally:

  • Security of payment - get paid on time and every time!
  • Access to finance and additional or alternative funding options
  • Value for money and cost effectiveness
  • The ability to drive out operational efficiencies
  • Improved profitability
  • Identification and mitigation of risks
  • Sharpening credit quality and control

Needs of banks/financial institutions providing trade finance:

  • Transactional control and 'constructive' title to goods
  • Provision of facilities that are closely matched to the customer's actual funding requirements
  • Avoidance of funds being diverted into supporting general working capital or financing losses
  • Repayment of facilities directly linked to the sale of underlying goods on an individual invoice by invoice basis i.e. self-liquidating
  • Early warning of potential customer liquidity problems
  • Improved credit quality through an enhanced ability to monitor risk
  • Enhancement of the 'risk/reward' equation
  • Increased revenue streams and reduced losses
  • Remain competitive in the trade finance arena
  • Complying with developing legal and regulatory requirements
  • Reporting to senior management to enable a clear understanding of risk

The Risk Reward Ltd proposition

At Risk Reward Ltd we have a team of international trade experts who are available to add value to and assist banks and their clients with their international trade related scenarios and strategies by:

  • Providing advice to corporates of all sizes, banks/financial institutions and professional bodies on the subject of cross-border trading and related practices with the objective of providing risk mitigation solutions, financing options and cost saving/revenue generation opportunities
  • Designing and delivering tailored in-house and public international trade related courses and workshops
  • Training and developing front, middle and back office employees of corporates, banks/financial institutions and professional bodies in the field of international trade practices and procedures.
  • Advising firms on the impact of new and developing rules and regulations
  • Modelling or calibrating models involved with international trade, ensuring that senior management receive the information they require to effectively manage and control the area.

International trade remains the key to global prosperity and almost every economy in the modern world would stop functioning without imports and exports of some kind. This applies to every country, including those with active Islamic banking sectors. Trade between Islamic countries and institutions is increasing, as is the demand for Sharia compliant methods of financing this trade. With the assistance of Islamic scholars, Islamic principles can and have been applied to the methods and financial instruments used in conventional international trade and most Islamic banks can now offer their trading clients a full Sharia alternative. Risk Reward have been long standing supporters of the development of both Islamic banking and Islamic trade finance and our experts have worked extensively in both the Far and Middle East as well as Europe, offering solutions to these challenges. We are experts on all aspects of Sharia compliant services and are specialists in the area of International Trade Finance, having worked extensively for some of the world's leading international Islamic banks and trading organisations. Our knowledge of AAOFI and IFSB requirements combined with an appreciation of the differences between different Islamic structures and jurisdictions enables us to provide innovative solutions to the real challenges faced. We can advise on all aspects of Islamic trade finance from simple payment procedures to complex trade finance solutions. Our experts can assist Islamic firms at both operational and strategic levels and can advise them on almost any aspect of this exciting branch of Islamic banking.

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