Advanced International Business

Make the optimal decision for the company

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• World Merchandise trade volume is exepted to grow:
  • 2024: +2.65%
  • 2025: +3.3%
• Asia: Leading in Merchandise Export
• Word GDP: remains stable at 2.7% in 2025
• Tensions could lead to trade fragmentation (f.e Conflict in the middle eats diverted sea shipments between Europe - Asia)
• Word Trade very resilietn last years
• Inflation expected to decrease in 2025

1. Cautious growth: significant disparities sty bewteen countries
2. Increased demand in sectors like: EV's, solar panels, batteries, semiconductors
3. Trade restrictive measures: climat change driving changes in industrial and trade policies
4. Strong demand for conatiner shipping
5. Longer supply chains (geopolitical tensions)

1. India
2. Indonesia
3. China

• Relativ bright outlook
• Still tight monetary conditions (housing-/credit markets) but global activities --> resilient
• Inflatio falling faster than projected, labor markest are easing, unemployment rate on record low
• USA strong growth, aswell as many emerging markets

• Reslilient global activity
• USA expected slower growth --> Tight monetary policy
• China expected slower grwoth --> weaker consumption/investments continue
• EU: recovers slightley
• Brazil, India, Southeast Asia: Great resilience

1 - 4: Environmental risks --> Could hit the point of no return

5-6 --> Ideological rsks (Misinfomration, AI abuse)

7-10: Migration,  Cyper Security, societal polarization, Pollution

1. Trade Fragmentation
2. Financial Fragmentation
3. Economic Cost
4. Emerging & Developing Countries
5. Global Public Goods

• Risk tolerance depends ond kwoledge, experience, culture, confidence
• Savings increases with high risk acceptance
• Savings decreases with low risk acceptance

---> Today is is the most expensive, tomorrow is cheaper, becaus ewe can prepare

Under Art 102 of the Swiss Criminal Code, companies may held be liable for certain offenses if they failed to take all necessary and reasonable organizational measures to prevent theses ofenses.

Fine ---> up to 5 million Swiss francs.

f.e. Insurance

1. Pay attention to high pressure situations
2. Investigate deviation and learn from them
3. Tackle root causes
4. Demand explanations
5. Consider worst case scenarios
6. Reward transparency
7. Evaluate at every step

• With internationally integrated capital markets, the value of an investment does not depend on the currency use

Stochastik (Aleatory) uncertainty:  Probability of future outcomes determined by a random process f.e roliing dices, weather (the kwon unknown)

Epistemic uncertainty: Arises from lack of knowledge f.e. Probability that Brazil pay his foreign debt s till 2050 (the unknown unknown)

1. Cyber Incidents
2. Business Interruption
3. Changes in legislation and regulation
4. Shortage of skilled workforce
5. Market developments
6. Political riskss and violence
7. Macroeconomic developments
8. Natural catastrophes
9. Climate change
10. New technologies

• Diversifiable Risks (f.e. regional Hurricans, bush fire / management decisions) ---> company or industry-specific  = insurable
• Undiversifiable risks (f.e. Inflation) ---> concernes the whole market = uninsurale

Hazard Risk:

• Property Damage risk (fire, storm)
• Legal risk (Regutlatory compliance, Corruption, 
• Injury to employees (Personnal risk )
• consequential loss f.e. Procut Liabiliy

Operational Risk:

• People risk - Employee Turnover
• IT risk - Because o automated manufacturing process
• Management oversight - f.e. Inability to find skilled workforce
• Supply Chain disruptions

Financial Risk:

• Market risk - Exchance rate risk
• Credit risk
• Price risk - For raw materials and supplies
• Liquidity risk

Strategic Risk:

• Economic environment
• Political evironment
• Demographics
• Competition

Hazard Risk: Arises from property, liability or personnel loss exposures

Operational Risk: Arises from people, processes, systems or controls

Financial Risk: Arises from the effect of market forces on financial assets or liabilities

Strategic Risk: Arises from trends in the economy and society

Pure Risk (Hazard risk, Operational risk): Always negative (normally): Risks that have only two possible outcomes: loss or no loss. There is no possibility of gain.

Speculative Risk (Financial risk, Strategic risk): Can be good or bad, Often tied to financial or business decisions. outcomes: gain, loss, or no gain/loss.

Shochastic uncertainty: Describes the probability of future outcomes determied by a known random process (Rolling dices)

Epistemic uncertainty: Arises from a lack of knowledge or incomplete infromation (the unknown unknowns)

An analytic tool (graphical) that helps to structure decisions in Risk Management

Strucuting decisions allow us to:

1. Calculate the expected value of decisions
2. Calculate the value of information
3. Understandthe assumptions of experts
4. Update knowledge - by new informations

Bow Tie Analysis, Delphi Method

• Hazard Risk

Hazard Risk:

1. Fire in a warehouse
2. Natural disaster (earthquake, flood)
3. Chemical Spill

Operational Risk:

1. Equipment failure
2. Supply Chain Dissruption
3. IT Failure

Financial Risk:

1. Exchange Rate Fluctuations
2. Crediti Risk, when a major client is inable to pay
3. Interest Rate Fluctuation

Strategic Risk:

1. Strong Competitors
2. Change in regulations
3. Technological Advanceent/Shift in Consumer Preferences

• Pure Risk (Hazard Risk, Operational Risk)
• Speculatice Risk (Financial Risk, Strategic Risk)

1. Technichal Risks
2. Contractual Risks
3. Business Risks

1. Avoid the risk
2. Mitigate the risk (Porbability, Severity)
3. Transfer the risk (Insurance)
4. Accept the risk

1. Near Misses: Often unremarkable small failures in day to day business that cause no immediate harm.
2. Normalization of Deviance: Tendency to accept anomalies
3. Latent Errors: Multiple, small often seemingly uniportant human errors. 

Risk =  Likelihood (Probability) x Consequence of failure.

---> It is always an action needed to put a hazard into a risk!

Hazard: Potential harm