Commodity Price Risk Management
Variance works closely with the finance teams of our clients with the objective of providing an exhaustive and independent advice on interest rate risk management.
Metals, Gas, Oil, Biodiesel, Power, or Agricultural Commodities. Companies operating with this type of materials turn to Variance for specialized advice on commodity price and energy risk hedges using a systematic 3 step approach, which includes:
Modeling the client’s financial risk profile and assessing the severity of the client’s risk exposure under unfavorable market scenarios
Formalizing commodities risk management policies
Studying the availability of financial derivatives linked to the specific commodity or any other sufficiently correlated alternatives. Evaluating the basis risk involved in a potential proxy hedge.
Validating the accounting implications of the envisaged commodity hedge and its compliance with IFRS9 accounting standard principles before the trade
Choosing suitable commodity hedging strategies.
At Variance we have developed proprietary risk analysis tools and pricing models to provide transparency and live prices for hedging products.
Our financial expertise, market experience, and analytical capabilities, coupled with a deep understanding of the client’s context and objectives, makes us an ideal partner in the pursue of optimal financial risk management decisions.