Transfer Pricing in International Business

Risk and Return

Taking risks is a necessary part of conducting business, with the level of return being the compensation for the degree of risk being taken. The specter of constant change or the acceptance that risks are a part of our everyday organizational life should not be taken as a reason for doing nothing about risk. At the very least, we need to identify every risk that our organization is exposed to whether they are market risks or exchangeable risks.

In the context of pricing goods and services, risk expresses itself in the variability, or potential variability, in the products or services we ­supply and the customers we supply to. Put more simply, our products may become unfashionable or too expensive, and our customers may change ...