Commodity Risk Management

Commodity Risk Management involves identifying and minimizing the financial risks associated with fluctuations in commodity prices, such as oil, grain, or metals. In the context of Market Risk Management, it focuses on protecting businesses from potential losses due to unpredictable price changes. Companies may use various strategies, like futures contracts or options, to hedge against these risks. By effectively managing commodity risk, businesses can stabilize costs, protect profit margins, and ensure more predictable financial performance in an often volatile market.