Question

Explain what kind of risks in foreign exchange are faced by the mncs

Answer 1

Risks in foreign exchange are faced by the mncs:-

1. Higher potential for loss of assets by nationalization or war.

2. Possible changes in political system or political parties.

3. Possible backlash by host country citizens.

4. Difficulty in retrieving earnings.

5. Lower skill levels and lower motivation in the work force in underdeveloped countries.

6. Difficulty in maintaining efficient and fast global communication and coordination.