Managing Commodity Price Risk

CHAPTER 1

Introduction to Commodity Price Risk Management

Why Is Commodity Price Risk Management Important?

Almost every organization is exposed to financial risk stemming from commodity price volatility. Risk exposure may be direct, from the prices paid for raw materials transformed into products sold to customers, or it may be indirect, from higher energy and transportation costs. The purpose of this book is to describe several approaches organizations can implement and adapt for managing commodity price volatility and reducing exposure to the financial risk associated with purchased goods and services. This topic is important for supply chain and finance professionals due to the significant direct financial effects price volatility has on ...