There are many risks associated with international trade. Generally, these risks can be categorized under political risks, commercial risks, economic risks, and other risks. Despite these risks, many companies are still eagerly looking to expand internationally. This is because there are various ways a company can use to lower risks.  Some of the risk management tactics include a thorough market research, a comprehensive insurance plan, or partnership with a bank that has plenty of expertise. Therefore, with reduced risks, international trade becomes very attractive as it opens up new market or lowers cost depending on whether the company is importing or exporting.

Economic sanctions put into place by a government are a huge factor influencing international trade. When an economic sanction takes effect, the presumed outcome is that no company will trade with the country under sanction. However, in reality, this failed to be the case. One obvious reason is the high profit, which is accompanied by the high risks. While there is a way to get around the legal aspect of the economic sanction by going through another country, which acts as “the middleman,” the risks associated will inevitably become higher and harder to reduce.