Implementation of commodity risk management function
Commodity price risk management is very often overlooked within the risk management practices of companies. No one really feels in charge for it as this responsibility typically spans across various departments:
- it originates in Procurement either with direct or indirect raw materials purchases;
- it finally ends within sales of finished products where it is usually rather difficult to assess the extent to which commodity price changes are passed-on to final customers;
- and in between it went through R&D, storage, production and shipping where it got even more complex and where time lags and pricing formulas start to mix and accumulate.
O2 Finance has accumulated unrivalled experience in taking you through the journey of assessing your risks (explicit and implicit) and 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.
- 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 organisation.
- 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 organisation allowing risk mitigation through a series of channels ranging from changes in contracting method, sales practices and financial instruments.