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Commodities People Sponsors Trends in Commodity Risk Research

Commodities People is sponsoring our Trends in Commodity Risk research project along with Amphora and the Nasdaq Market Technology Division. Commodities People will also support the study by polling attendees at its ComRisk event. Ben Hillary, MD of Commodities People, will lead a short session aimed at getting feedback for the study prior to the afternoon break at the event. ComRisk is a part of Commodity Trading Week that will take place 26-27th April at the Hilton Tower Bridge, London with expectations of a very good attendance post the COVID lockdowns. For more information on CTW and ComRisk, please click here.

Commodity trading is fraught with risks of varying types. In recent years, the number of types of risks that businesses that trade, procure, consume of use commodities have increased considerably and now include not just price or market risk but also credit, regulatory, legal, political, operational, and other forms of risk. Moreover, the software used to track commodity transactions has also evolved considerably and is often light on risk analytics. Migration to software and/or services in the cloud has also introduced a whole series of other risks around IT, application, and infrastructure security. Fraudulent activities have also been in the news in recent months and years adding further checks and balances throughout supply chains to help minimize such risks.

Against this backdrop, ComTech has noted several trends that include,

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  • the development of more advanced risk analytical solutions in various areas of risk management to supplement CTRM-type risk functionality,
  • the development of broad cross-commodity risk platforms that allow further enterprise-level assessment of risks utilizing data from disparate systems across the company,
  • Increased risk functionality added to CTRM and CM solutions,
  • A move to real-time calculation of risk metrics and away from overnight calculations of prior day.

With the emergence of ESG as another area that can and will impact risk management, ComTech would like to undertake research into the area of commodity risk management and solutions.

The objective of this research will be to document the various risks and solutions emerging to help manage them in the industry at a generic level identify application classes in the process. Additionally, we will attempt to classify vendors and products in the market according to their relative risk capabilities and footprints at a directory-type level. This ‘directory’ can provide a tool for buyers and investors seeking to build short lists of solutions and will be used to overhaul the CTRMCenter online directory as well.

Part of the research is via a very short questionnaire taking around 5 minutes to complete and it can be found here. The final report will be issued as a FREE download from this site.

We thank Commodities People (Amphora and the Nasdaq Market Technology Division) for its sponsorship and support.