Commodity markets: Study shows companies are adjusting aspects of their risk managementExpectations that heightened risk and complexity in commodity markets will continue |
A Deloitte survey of commodity market participants highlights that market players expect heightened risk and complexity in the coming period and that the majority anticipate aspects of their risk monitoring will evolve in response. Three-quarters of respondents also expect regulation of their activities to increase over the next 12-18 months.
The survey was conducted in September and October 2008 amongst a total of 40 participants from all the different stages of the energy and commodity value chain, with estimated aggregate revenues in excess of 250 billion dollars. The majority of the participants are Swiss-based.
The results of the survey show that, as a result of market conditions, a number of organisations have changed aspects of the way they operate. Over the coming period, many market players expect to make further changes to respond to decreased availability (or higher cost) of finance, increased credit risk or heightened regulation.
The key points from the survey are:
- 70% of respondents expect that commodity markets will see increased risk and complexity over the coming 12 to 18 months.
- Four out of five of those questioned expected aspects of their risk monitoring to evolve over the coming year, by increasing the frequency of monitoring, number of risks measured, level of detail or degree of centralisation.
- Three out of five of those surveyed foresee a worsening of capital available for investment and do not anticipate further investment being made to alleviate this.
- Three-quarters of respondents expect their activities to be subject to increased regulation over the next 12 to 18 months.
- The opinions of the market players are split on whether market volatility will increase or decline over the coming year by comparison with the current year.
- The majority of respondents are of the opinion that, in the face of the financial crisis, they have sufficient information at their disposal on market fundamentals to help price forecasting.
David Quinlin, leader of Deloitte Switzerland’s energy and resources practice, commented: “A number of organisations have changed, or expect to change, aspects of the way they do business to respond to the widespread expectation that risk and complexity will increase in the short- to medium-term.”
Chris Jones, partner, added: “The key issue for management currently is to ensure that strategies and systems are sufficiently robust to deal with continued market turmoil and dynamic enough to respond to further changes. The ability to react positively to, or anticipate, the challenges ahead will be a source of competitive advantage.”
Last Updated:
Contacts
- Name:
- David Quinlin
- Company:
- Deloitte AG
- Job Title:
- Head EIU Switzerland
- Phone:
- +41 (0)44 421 61 58
- dquinlin@deloitte.ch
- Name:
- Chris Jones
- Company:
- Deloitte Geneva
- Job Title:
- Partner
- Phone:
- +41 (0)22 747 70 75
- chrispjones@deloitte.ch
- Name:
- Karen Seifert
- Company:
- PR & Communications
- Job Title:
- Phone:
- +41 (0)44 421 65 06
- kaseifert@deloitte.ch