Commodity businesses have greater dependence on effective risk management than traditional corporate treasuries, due to a wider variety of complex risks and challenges. Some of the common risk factors that Commodity businesses are exposed to include:

/ Access to supply/ Data from multiple sources and systems/ Key-man risk and undocumented procedures/ Commoditiy price changes and foreign exchange

COMMODITY RISK MANAGEMENT SERVICE

/ Counter-party risk and global stakeholders/ Inadequate inventory accounting methods/ Inadequate hedging on overseas products and supply

Stakeholder misalignment

Development

Policy

Procurement

Process

Systems

Key-man

Commodity Price

Foreign Exchange

Credit

Liquidity

Treasury

Basis

Do multiple stakeholders (across the board, management and operations) have conflicting views on what current processes are or what they should be?

Do you undertake formalised process development that does not interfere with day-to-day operations?

Is your policy correctly identifying, measuring, monitoring and managing risk?

Is your policy aligned to commercial strategy and risk appetite?

As a buyer, do you have access to enough supply to meet your short-term demands?

Are your risks being managed in a clear, repeatable traceable order in a consistent operating cadence (eg weekly or monthly)?

Do you have critical risk management data sourced from multiple systems?

Is a single individual the holder of critical undocumented or ad hoc operational risk management knowledge?

Is it possible for the price you buy to be adversely different to the price you will sell at?

Are you buying or selling in more than one currency?

Are you effectively mitigating counterparty risk?

Do you have consistent visibility on available liquidity at any point in time?

Are your inventory accounting methods aligned with the best-practice profitability analysis?

Are you hedging using a product that is not identical to the underlying exposure?

Strategic

Risk Category Type of Risk Key Risk Question

IS YOUR COMMODITY BUSINESS AT RISK?

Operational

Market

Treasury

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The nature of the company’s financial risks was evolving faster than we could develop internal treasury resources to manage them, The Rochford team allowed us to focus on the core business confident in the knowledge that market risks would not compromise our strategic objectives.”

Peter Calopedis – Group Finance Manager TNA Australia Pty Ltd

Rochford is a global independent treasury advisory house, specialising in financial risk management, operational treasury, hedge accounting and currency overlay services.

We advise investment firms, corporates, financial institutions and not-for-profits worldwide, proactively managing their treasury

risk and enhancing their business.

SYDNEY - HONG KONG - LONDON

Rochford’s experience in advising the Australian commodity industry has resulted in a comprehensive understanding of the life cycle of a commodity business and how their risk profile evolves over time.

We’ve identified three stages of commodity risk and the key areas we can support you with:

COMMODITY RISK MANAGEMENT SERVICE

• Currency risk on Capex spend• Commodity prices on

feasibility study

• Economic / Risk Modeling• FX and Commodity Price

forecasting• FX Risk Management

Advice / Policy

• Currency risk, both transactional and transiational

• Interest rate risk• Commodity price risk

• Earnings at Risk (EaR) and Cash Flow at risk (CFaR) analysis

• Development of treasury policy, processes and systems

• Assistance with negotiating funding, ISDAS, hedging lines and solutions

• Funding options e.g. Private placement and banking syndicates

• Currency risk, both transactional and transiational

• Interest rate risk• Commodty price risk• Economic risk / Cycles

• Ongoing risk monitoring• Compliance oversight,

management and market to market reporting

• Strategic Advice• Cash Management /

Investments

Risks

Rochford Services

Stage

Financing

Exploration / Feasibility

Equity

Exploration / Production

Equity and Debt

Production / Asset Development

Cash Flow

WHY WORK WITH US? Working with Rochford to manage your commodity risks, you will feel confident with:

the appropriate tools to facilitate optimal processes and consistent reporting

a risk management policy that’s right for your unique business

alignment between global stakeholders to minimuse miscommunication and process gaps

our on-going support and guidance in conjunction with internal stakeholders

As expert Treasuryadvisors, with experienceacross a multitude ofsectors, we can supportyou to gain enhanced clarity, visibility and traceability of risks.

Protect & Enhance

overlay@rochford-group.com

+61 2 8916 6115 Rochford Capital Pty Ltd

rochford-group.com

ukenquiries@rochford-group.comFor UK Enquiries:

+44(0) 20 8057 9180

Contact our riskmanagement team.

Agricultural Commodities Bonus

Rochford‘s agricultural commodity clients also gain access to Basis Commodities – a boutique consulting firm with over 70 years in procurement, sales and supply chain risk management.

Our collaboration with the team at Basis Commodities provides a unique opportunity for agricultural businesses to receive advice for every point of the supply chain – from producer to consumer and everything in-between.

An international soft commodities trader sought to enhance their risk management framework.

COMMODITY RISK MANAGEMENT / Case Study

overlay@rochford-group.com

+61 2 8916 6115 Rochford Capital Pty Ltd

rochford-group.com

ukenquiries@rochford-group.com

For UK Enquiries:

+44(0) 20 8057 9180

Contact our risk management team.

Protect & Enhance

Rochford is a trading name of Moneycorp Financial Risk Management Limited (company number 5774742) registered in England. Its registered office is at Floor 5, Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ. Moneycorp Financial Risk Management Limited is authorised and regulated by the Financial Conduct Authority for the provision of designated investment business (firm reference number 452443).

• The business was exposed to procurement supply shock and market price fluctuations between their fixed buying price and floating sale price.

• They had differing perspectives across the board, management and operations on how to define, measure and operationally manage procurement and market price risk.

• Their current processes to obtain and consolidate data were highly ad-hoc and dependent on one individual employee who was due to leave the company soon.

• Through workshops with management and operations, we helped the company gain alignment on risk management objectives and identify gaps in their current processes.

• We developed appropriate tools to facilitate optimal processes which aligned with a low-touch monthly operating cycle.

• We continue to provide ongoing support and guidance in conjunction with their internal team.

The business was able to take both our consultative guidance and developed tools to manage the implementation themselves.

They now have enhanced clarity, visibility and traceability of risks.

The business was able to reshape their risk management policy to align with a process they are confident is right for their business.

THE PROBLEM ROCHFORD SOLUTION

THE RESULT