Why is a solid risk management strategy crucial in today’s sophisticated and capital intensive commodity markets?
MH. Recent exponential growth in the energy commodity markets has changed the rules and requirements of risk management strategies and systems. With this growing volatility, commodity risk managers are now seeing many of the risk analytics, strategies and solutions already being applied in financial trading circles rapidly migrating into the energy commodity trading space. However, a risk management operation is functionally complex, dependent on many diverse skills, and very data intensive. Compounding the problem is the fast pace of financial innovation which can make many risk management models obsolete, and as a result, enterprises upgrading to next generation risk management systems often lag behind the market trends. Additionally, many risk management systems fail to offer a holistic representation of different risks. Yet the need to greatly enhance the overall risk management functions of an enterprise, with regards to both the financial and physical aspects of their commodities
