Commercial Risk

Summary of Commercial Risk

The risk borne by an exporter that his foreign customer may be unable to pay for merchandise imported under open account terms. Commercial risk is contrasted with political risks, which arise from governmental actions and are unrelated to the financial condition or credit-wor- thiness of the foreign customer. In the case of U.S. exports, insurance against commercial and political risks can be obtained through the Foreign Credit Insurance Association (read this and related legal terms for further details).

(Main Author: William J. Miller)

Commercial Risk and International Trade Economy

In relation to international trade economy, Christopher Mark (1993) provided the following definition of Commercial Risk: An exporter’s risk that a foreign customer may be unable to pay for merchandise purchased under open account terms. Such risk contrasts with political risk, which arises from government actions and is unrelated to the financial condition or creditworthiness of the foreign customer. See Foreign Credit I insurance Association (Sec III).

Commercial Risk in International Trade

Meaning of Commercial Risk, according to the Dictionary of International Trade (Global Negotiator): The possibility of non-payment caused by such buyer-related problems as insolvency or bankruptcy, as opposed to problems encountered by the buyer’s country. See also country risk.