Multinational business with $45BB in annual sales required holistic view of price risk in order to effectively hedge
With tens of billions of dollars in annual global physical commodity inventories – sugar, cocoa, nuts, energy, and more – managed across 6 business units and as many accounting systems, a single view of physical commodity exposure was needed to enable optimal financial hedging and risk management on a global basis.
Essentia and the client designed new business process workflows as necessary to achieve the decision-support required to enable global price risk mitigation. This includes:
- Augmenting the out-of-box CTRM features with additional tables, screens, and logic enhancements to address a number of unique client business requirements.
- Interfaced the CTRM with numerous accounting systems, pulling in fixed price contract purchases and inventories enabling total commodity exposure calculations.
- Simulation of the best options for hedging.
- Allocation of hedges back to the relevant business units.
A foundation of global derivative trading & risk management capabilities were deployed, enabling business transformation and physical commodity price risk mitigation.
At ~$45BB in annual revenues, this client is one of the world’s leading manufacturers of chocolates, chewing gum, and other confections.
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