What Is Economic Risk?

Economic risk is the degree of influence of unexpected exchange rate changes on the present value of future cash flows of multinational corporations expressed in domestic currencies. It is used to measure the potential impact of exchange rate changes on the overall corporate profitability and company value. ^[1]

Economic risk

Economic risk refers to the uncertainty of economic prospects.

Economic risks can be divided into: (1)

Economic risks The establishment of a socialist market economy and the continuous development of socialist democracy and the legal system have created unprecedented opportunities and challenges for the vast number of private enterprises to carry out equal competition, operate in accordance with the law, and accelerate development. It has become a top priority to use some legal means to avoid various economic risks in accordance with laws and regulations, safeguard the legitimate rights and interests of enterprises, and ensure the healthy development of private enterprises.

First, use notarization to prevent risks fundamentally. According to China's current legal regulations, notarization has three kinds of legal effects: the effect of evidence, the effect of enforcement and the effect of the establishment of legal acts. This is also the fundamental difference between notarization and other certificates. Using notarization correctly, citizens, legal persons and other organizations can not only prevent conflicts and disputes in a timely manner, but also effectively resolve economic risks. During the trial of economic and civil cases, the people's courts can directly take evidence for legal acts, facts and documents that have been certified by notarization as the basis for trial. For a creditor's document conferring mandatory enforcement issued by a notary office, if the debtor fails to perform the contract to repay the debt, the people's court may directly implement the creditor's application without proceeding. Article 218 of the Civil Procedure Law clearly states: "If a party fails to perform a creditor's right document that grants enforcement effect to a notary public according to law, the other party may apply to a people's court with jurisdiction; The court should enforce. " According to the above-mentioned effect of notarization, private business owners can use it to help solve the problem of recovering dead debts that have passed the statute of limitations. If a unit owes a business loan and the time limit for litigation has expired, according to law, the court will not accept a case where the time limit for litigation has expired. In this case, the enterprise can apply for a notarization notice through a notary office to extend the statute of limitation or recalculate the statute of limitation of the lawsuit, bring back the dead and dead debts that were originally hopelessly recovered, and make the enterprise recover unnecessary losses. Therefore, private enterprises should give full play to the preventive effect of notarization. For various economic contracts that have office permits but are about to exceed the time limit for litigation, they must promptly go through a notary office to send a dunning service to notarization to extend the time limit for litigation. Timely re-issuance of relevant transfers, etc., and all give compulsory enforcement effect, to plan ahead, prevent problems before they occur, and avoid new sluggish and dead accounts due to lack of legal procedures.

Second, the use of lawyers to resolve the factors restricting the development of enterprises. Lawyer means is an important means for private enterprises to operate and develop according to law. Private enterprise owners should actively obtain the intervention of lawyers and grass-roots legal workers in various aspects of the establishment, establishment, production and operation, and internal management of the enterprise, so that they can help the enterprise to comply with the relevant laws and regulations, establish a system according to law, and standardize its actions. Try to avoid all kinds of contradictions and disputes in operation and ensure your own healthy development. At present, compared with state-owned enterprises, the operators of private enterprises generally lack the consciousness of managing according to law, and the economic disputes that are easily caused are often undocumented, and these disputes without evidence cannot be accepted by the courts. Therefore, the participation of lawyers must be based on facts and laws, and in accordance with the principles of fairness and reasonableness, non-litigation methods should be used to resolve the contradictions between the parties and reduce and reduce various adverse effects and economic losses on the development of the enterprise. Operators of private enterprises should give full play to the role of lawyers, carry out debt repayment in accordance with law, promptly expand the scale of production, and enhance market competitiveness. At the same time, lawyers should be involved to help companies and investors and lenders to revise and improve loan and repayment contracts, provide legal advice to preserve assets and revitalize funds, so as to enable enterprises to continuously repay loans and ensure that the company gradually recovers Production, entered the track of healthy development.

Third, we must use legal counsel to properly handle legal issues in daily production and operation. The market economy is a legal economy. Especially under the new situation of China's entry into the WTO, the production economic activities of enterprises must operate in accordance with legal regulations and international practices. At present, many private enterprises have a weak legal concept and do not pay attention to and use legal methods to guide and manage the production and management of enterprises. According to statistics, currently, less than 20% of the companies employ legal consultants, and private enterprises are even lower. This is also an important source of the increase in economic disputes of many enterprises. For example, some companies are eager to achieve success in foreign joint ventures and cooperation. They do not follow procedures and have been exploited by foreign companies for legal reasons, resulting in irreparable losses due to fraud. Due to insufficient credit review of the other private company and the lack of effective supervision measures, the foreign bosses fled before the company put into operation, and the day when it went into operation became a failure. Therefore, private enterprises should give full play to the role of legal consultants, do a good job of reviewing various economic contracts, participate in corporate negotiations, credit review and other activities, and provide reliable legal advice for all aspects of corporate loans, transactions, guarantees, etc., so that enterprises avoid Take greater economic risks due to poor management and weak legal system.

Fourth, the use of legal education methods to enhance the overall ability of enterprises to prevent economic and economic risks. At present, the debts of some private enterprises have been identified as losses on dead accounts, and a considerable part of them is caused by corporate supply and marketing personnel who do not understand the law or have committed crimes. After entering the market economy, the proportion of management personnel in various types of enterprises has greatly increased. Generally speaking, the proportion of corporate procurement and sales personnel has increased from about 10% to about 30% in the past planned economic period, and some even accounted for an absolute majority. Most of them, due to weak legal concepts and management loopholes, the rate of crimes committed by corporate sales staff and financial staff is on the rise, such as fleeing with funds, misappropriating public funds, charging rebates for high-priced purchases, and embezzling corporate property. "Drips and leaks" existed in large numbers, which led to a large loss of corporate funds, increased production costs, and difficult development. It should be said that these are not entirely the fault of the operators, but the important issue is the construction of the legal system of the enterprise. To solve this problem, the most important thing is to strengthen the legal education of enterprises. At present, as an enterprise private enterprise, it is necessary to do a good job in studying and training the laws and regulations such as the Company Law, the Contract Law, the Guarantee Law, the Criminal Law, the Criminal Procedure Law, and the Administrative Procedure Law. The publicity of laws and regulations such as the "Regulations on Letters and Visits" and "Policies on Public Security Management Penalties" has made the decision-making level, management and front-line employees of the company know, understand and abide by the law. Do a good job of establishing and operating existing enterprises in accordance with the law, establish and improve various rules and regulations in accordance with legal norms, thereby plugging various loopholes in business management, fundamentally eliminate the source of economic risks, and achieve the rapid and healthy development of private enterprises .