Managements need to focus more on financial risks such as fluctuations in interest and exchange rates rather than viewing them as an integral part of corporate strategy. Companies should consider all the options available to deal with a particular risk. Risk management is an old concept. In the Old Testament of the Bible, we come across an example of an Egyptian Pharaoh who had a dream, which Joseph interpreted as seven years of plenty to be followed by seven years of famine. In order to deal with this risk, the Pharaoh purchased and stored large quantities of corn during the good times. As a result, Egypt prospered during the famine. In this example we realize that The Pharaoh was obviously taking a risk. His investment would have been unproductive, if there was no famine at all. In the same way, I would like to say that our exporters should take a holistic view of what obtains at the business level and initiate preventive measures.

Recently exporters had to be satisfied with a rising INR leading to lower realization in the Indian Rupee (INR) terms on their exports. Hopefully happy days are back again for the exporters. Indian Rupee (INR) has lately been depreciating via the US dollar, thereby improving the realization of Indian exporters in the Indian Rupee (INR) terms. It is high time that exporters realize that an appreciating Indian Rupee (INR) do not catch them napping again. In other words, exporters should take some preventive measures in order to ensure that they are not caught up in the napping situation again. The exporters should now be in a position to identify the various types of risks and then deal with it strategic measures.

It is a myth to believe that most risks are external. One cannot wait passively for events to happen and risk can thus be ignored till that point. Risk can neither be avoided nor eliminated completely. But without taking risk, no business can grow. If there were no risks, then we would not require managers. We need to realize the risk involved in the business and initiate preventive measures.