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Managing Commodity Price Risk by George A. Zsidisin

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Chapter 4

Assessing Price Risk Exposure and Risk Tolerance

As we learned in chapter 1, commodity price volatility affects almost all organizations, either directly through their own purchases, or indirectly through their supply chains. Chapters 2 and 3 explained how to analyze price movements and develop forecasts. Because commodity prices are usually outside of the control of any one organization, supply chain professionals rarely are able to directly influence commodity prices. Instead, supply chain managers must understand their organizations’ exposure to price risk and decide if, and how, their organization should manage that risk. Chapter 5 describes a variety of tools for managing price risk and when they are likely to be most effective. ...

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