Commodity Risk Management

Despite its strategic importance and significant impact on the company’s bottom line, Commodity Risk Management is often left behind in many industries. One of the main reasons for this is the dilution of this responsibility across different departments (procurement, treasury, sales) with no one taking full ownership of the topic.

O2 Finance has accumulated unrivalled experience in taking you through the journey of assessing the Company's exposures (Direct and Indirect, Explicit and Implicit) and in setting-up appropriate strategies, organisation and tools to help you manage those risks in the most cost-effective way, capitalising on the complementary expertise of Procurement, Sales and Treasury.

Our approach aims at aligning commodity risk management actions with the business model of the company, fully reflecting the risk appetite and ensuring an end-to-end optimal treatment of risk management strategies (from execution, follow-up of the risk position and their impact on EBITDA as well as their accounting treatment).

O2 Finance helps you:

• Assessing the exposure through the value chain;
• Defining optimal risk management strategies, making use of the available strategic initiatives, physical contracting methods and financial instruments;
• Selecting and implementing the most appropriate Commodity Risk Management systems;
• Designing and implementing the reports & KPIs that will allow you running your commodity risk management to deliver the strategy and reach the objectives.

Case studies

• For a leader in consumer electronics industry we have assessed their raw materials exposures, developed tools to follow-up risks and set-up a multidisciplinary organization allowing risk mitigation through a series of channels ranging from changes in contracting method, sales practices and financial instruments.
• For a worldwide brewer, we have set-up their Commodity risk management practice from a greenfield, selected and implemented a dedicated commodity risk management system, formed and trained a risk management team and led the change throughout the organization.