Traders play a pivotal role in the economic value chain consisting of manufacturers, distributors, wholesalers, retailers and consumers. They command a floating position and easily blend anywhere in the value chain.

As major contributors to our nation’s exchequer, trading companies play a significant role in taking Indian goods and services to the world and vice versa. It is evident that their role in India’s development cannot be overlooked.

Be it international import-export or domestic transactions, traders have to be on their toes to ensure that they are hedging their risks well and delivering value to every stakeholder.

• Price Volatility
  Traders who engage in international import and export need to constantly monitor currency rates. They can suffer major losses (or make windfall gains) due to change in foreign exchange rates triggered by international political, economical, strategic and even ecological developments. Several global events also affect the demand-supply metrics. One would be better served to not leave such things to chance and should look at hedging such risks. 

  
  
  

• Change in Preferences
  Technological advancements or change in consumer preferences can alter the business landscape. New entrants or the emergence of substitutes can have a detrimental effect on the demand of previously in-vogue goods. A change in market dynamics can leave a trader dumbfounded, while the stocksmay keeppiling up at thewarehouse.
  
  
  

• Taxation
  A sudden hike in international duties,protectionist measures, emergence of cartels, etc. can reduce profit margins.On the other hand,a trader who engages in domestic trade, faces the risk of a rise in value added tax, excise duty, custom duty and other local municipality taxes, all of which affect margins.

  
  
  

• Losses in Transit
  Damage to goods in transit can have serious financial repercussions. Traders need to be cautious especially, when it comes to supply of perishable items and those requiring special facilities.

  
  
  

Risks a trader must consider protecting against

Traders need to play safe and protect themselves against risks, which are an inherent part of their business. They may do so by seeking appropriate insurance covers.While risks such as change in preferences, policy changes, and price rise cannot be immediately protected against, those related to loss of goods in transit and manpower related issues could surely be covered.

1. Erection All Risks (EAR): This policy safeguards traders against losses occurring due to flood, strike, riots, earthquakes, theft, burglary and other related risks.

    
   
   

2. Fire Insurance: Fire insurance protects your business from the damage caused by fire. This extremely useful policy safeguards you from financial losses because of damaged property and goods.

    
   
   

3. Group Accident Insurance : Such a policy insures your workers against accidents. Traders, who engage in transport of goods that are hazardous in nature,can safeguard the interests of their workers by availing this policy.
   
   
   
4. Workman Compensation: Fatal workplace accidents are covered under the workman compensation insurance policy. 

It is wise to protect ones business against unforeseen circumstances to ensure business continuity and to excel.

Know more about how to safegaurd your trading activities.