Seeking Shelter from the War : Risk Mitigation Tactics for Trade Credit Underwriters in Today's Hostile Global Trade Environment
- Restrictions on Access:
- Open Access.
- The recent conflict between the United States and China has put stress on world trade and left business leaders and market participants with difficult decisions to make. Trade credit insurance underwriters have been hit especially hard by the tariffs levied by both sides and the uncertainty that the situation produces. This thesis provides strategies for trade credit insurance underwriters that aim to mitigate the risk associated with writing policies in this trade climate. By comparing research on world trade to the realities of the world trade environment today, it is discovered that political risk is the most important risk factor for trade credit underwriters to consider in the U.S.-China trade conflict. Research from groups such as Eurasia Group and the Economist as well as historical data from Political Risk Services and other sources demonstrate that geopolitical tensions are at unprecedented levels. The Asian region appears to be especially risky at this time. Given this information, trade credit underwriters should consider avoiding the majority of Asian countries and reject business where policy terms cannot be comfortably agreed upon. Further, underwriters must make sure to diversify the countries that the enterprise has exposure to, and vet firms to make sure that those being covered have diversified, resilient supply chains. Lastly, underwriters should contemplate their own heuristics and biases, as well as the heuristics and biases of those who provide them with the information to make decisions.
- Dissertation Note:
- B.S. Pennsylvania State University 2019.
- Technical Details:
- The full text of the dissertation is available as an Adobe Acrobat .pdf file ; Adobe Acrobat Reader required to view the file.
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