Commodity risk management
Volatile commodity markets demand holistic hedging strategies
Today’s commodity markets are exceptionally volatile due to geopolitical uncertainty and broader economic conditions. With 30% intra-year price swings becoming the norm, strategies developed two or three years ago may not be viable today. These legacy risk management programs often cost more while lacking the holistic view required in today’s market. Additionally, commodity risks often span the enterprise, making them more difficult to identify, quantify, and manage. That’s why companies rely on Chatham to inform their strategies and keep pace with the changing environment.
As the largest, independent financial risk management advisory and technology firm, executing over $2.9 billion in notional every day and negotiating over 3,000 ISDAs annually, Chatham offers the unmatched perspective that comes from managing the highest volumes and largest breadth of engagements in our field. This insight gives you an edge in benchmarking against your peers, designing optimal hedging programs, and managing exposures. With Chatham, you can access all the strategic, operational and technological capabilities required to manage an effective commodity hedging program, including:
- Policy assessment: Ensure your hedging policy documentation aligns with leading practices and achieves your objectives.
- Leading practice documentation: Obtain educational summary documents that outline corporate-leading practices for risk management in a multi-asset, multinational organization.
- Risk quantification: Understand the impact of exposures and existing hedges on key performance metrics with this analysis based on our proprietary risk models.
- Strategy development: Gain actionable recommendations aimed at reducing risk across the key metrics your organization identifies.
- Execution support: Leverage our team to implement and manage your operational hedging programs so you can focus on core activities.
- Hedge accounting feasibility assessment: Understand the pros, cons, and feasibility of electing to apply hedge accounting to commodity derivatives considering evolving standards and practices.
Clients enjoy significant advantages including:
- Gain insight into the leading practices of Fortune 1000 companies around the world through Chatham’s global presence and experience.
- Access insight from our team’s experience in trading, banking, and strategic risk management.
- Level the playing field with counterparties through unbiased, independent expertise focused on at-risk metrics and supported by our proprietary ChathamDirect platform.
Treasurer, U.S. transportation company
Chatham proactively addressed the changing market and guided us as we updated our commodity risk management strategies and executed a program to match existing market conditions.
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Chatham Hedging Advisors, LLC (CHA) is a subsidiary of Chatham Financial Corp. and provides hedge advisory, accounting and execution services related to swap transactions in the United States. CHA is registered with the Commodity Futures Trading Commission (CFTC) as a commodity trading advisor and is a member of the National Futures Association (NFA); however, neither the CFTC nor the NFA have passed upon the merits of participating in any advisory services offered by CHA. For further information, please visit chathamfinancial.com/legal-notices.22-0205
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