WHAT IS MODERN RISK MANAGEMENT?

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INTRODUCTION

In all of its forms, risk management is rapidly growing in importance within the commodity asset class. It will only become even more critical and complex in the future. Driven by unprecedented levels of change in the industry ranging from geopolitics to carbon, effective risk management is shifting for many commodity firms from just another activity to be managed to a critical component of business strategy that helps drive and inform brand, gain financing and trust, and demonstrates proper controls.

Of course, larger commodity-oriented businesses have always had a more sophisticated approach to managing risk, even using it as a strategic and competitive advantage. These businesses are heavily impacted by the number and pace of change in the industry and inhibited by their legacy solutions and overall systems architecture capabilities. This paper looks at why a new and broader risk management focus is rapidly emerging in commodities, what it involves, and what this means for risk management solutions and systems architectures, particularly at toptier commodity businesses.