BDC outlines three common export risks for Canadian businesses

The Business Development Bank of Canada (BDC) has released guidance to help Canadian businesses identify and manage critical risks for those looking to expand abroad. While exporting can significantly boost company revenues and profits, only a small percentage of Canada's small and medium-sized enterprises (SMEs) export, partly due to these inherent risks.

The report details three main categories of risks: economic and financial, social, and political. Economic risks include issues such as customer non-payment, broken contracts, currency fluctuations, and economic downturns in foreign markets. BDC recommends measures like obtaining credit insurance, diversifying export markets, and utilizing information from Export Development Canada (EDC) on country-specific risks to mitigate these financial exposures.

Social risks pertain to the impact of business activities on local and global communities, encompassing bribery, terrorist financing, labor and human rights issues, and environmental degradation. BDC emphasizes that companies can inadvertently become involved in such activities, potentially damaging their reputation and incurring significant financial penalties. Proactive identification and employee training are highlighted as crucial.

Political risks are constantly evolving and influenced by government actions, trade policies, sanctions, and protectionism. The BDC advises businesses to stay informed about global political developments and adhere to best practices to navigate potential challenges. By identifying and anticipating these risks, BDC aims to support the success of Canadian companies in international markets.