Exploring risk management strategies in global business environments

The purpose of this research was to determine if global organisations adopt formal risk management strategies to minimise risks and liabilities associated with international trade, and if a relationship exists between adopting a risk management strategy, and the number of countries global organisations do business with. Adopting effective risk management strategies minimises misunderstandings with customers and suppliers and may strengthen customer relationships by providing knowledge management support in these areas. The primary data was collected from 108 logistics and purchasing professionals using an online survey. The results identified that organisations use formal risk management strategies when dealing with partners in several countries. Thus, it is recommended that organisations develop a formal risk management strategy that includes contracts of sale, appropriate use of Incoterms for containerised shipments, application of cargo insurance and selection of governing body of law to minimise risks and liabilities in international trade. The results from this study provide valuable insights for organisations working in global business markets about how to effectively manage risks.