SAP - TINET - Tarragona Internet

Understanding Four Reasons Why Global Trade Is So Complex ...........

Four major bottlenecks lead to problems in global trade. By understanding

each of them, you can begin to understand how to put together a strategy to

manage them. The four major reasons why global trade can be tricky are

Long supply chains

New regulations and security initiatives

Modernization of government IT systems

Increasingly complex regulations

12,000

10,000

(Billion dolla

rs and pe

rc

entage)

World Merchandise Exports by Region and Selected Economy

8,000

6,000

4,000

2,000

0

1948

59 54 157

1953 1963 1973

579

1993

3,675

2003

7,371

2006

11,753

1983

1,538

Figure 8-1:

Growth in

value of

world

merchan-

dise trade

(Source:

World Trade

Organi-

zation).

142 Part II: Diving into GRC

How does global trade relate to GRC?

For companies involved in importing or export-

ing any part of their value chain, the C in GRC is

familiar. Global trade requires tremendous effort

in the area of compliance. Companies that don’t

comply with global trade regulations face fines,

penalties, or the possibility that their goods are

stuck somewhere gathering dust because the

proper paperwork hasn’t been filed. You can

easily translate these implications into risks, the

R in GRC. For example, in addition to compliance

issues, global trade presents risks because it is

often difficult to forecast when goods will be

delivered. Putting the proper policies and pro-

cedures in place ensures that a company has

an effective governance structure for global

trade.