In recent times, the commodity markets have been affected by unprecedented events ranging from political unrest, supply chain disruption to recession fears, which have caused major price shocks and dramatic fluctuations in a commodity trader’s financial performance. The complexity of commodity markets make risk an especially critical factor of business performance than ever before. Commodity markets have also become more complex with new participants entering to profit from this volatility and regulators implementing changes to the ways in which these markets are controlled.
The complexity is supplemented by increasing scrutiny of both regulators and market participants on the move to a low-carbon economy. On top of managing volatility of commodity prices, commodity traders are now faced with a broader question on the adoption of an appropriate sustainability strategy and sustainability reporting requirements to their stakeholders.
A robust control environment, together with comprehensive trading systems and reporting solutions are crucial in gaining insight over the company’s performance and potential opportunities. Timely and accurate risk reporting is key to facilitate effective strategic and operational decisions by commodity traders.
Together, we can support you in your commodity trading and risk management journey.
Your trusted advisor in navigating risk management and reporting challenges
It is imperative for the success of each company to recognise and manage the evolving risks and market volatility effectively. However, there is no “one size fits all” approach as companies vary significantly in their objectives and rationales for managing such risks.
Our advisors are able to work with you to understand your overall strategy and business model to provide solutions which are practical and sustainable for your business.
Select the tabs below to understand how PwC helps organisations reimagine your trading and risk management process:
Your trusted advisor in navigating risk management and reporting challenges
- Strategy and risk management transformation
- Sustainability-related advisory
- Operating model, governance and control
- Accounting and regulatory compliance
- Technology transformation
- Support management in developing a commodity risk appetite and trading strategy, including considerations of credit risk, commodities price risk and liquidity risk
- Support management to review the upstream to downstream business flows to optimise the supply chain
- Perform gap assessment and benchmarking exercise of commodity risk management and trading governance, risk and controls frameworks against market good practice
- Analyse key risks which affect the company and develop models for the monitoring and measurement of the key risks (such as a Value at Risk model)
Capitalising on our subject matter expertise, we offer end-to-end solutions that cover gap analysis, implementation andintegration of climate risk and accounting considerations in reporting through the following:
- Advise commodity traders and carbon market intermediaries on setting up of accounting policies
- Advise on accounting for ESG products (e.g. carbon credits, power purchase agreements, green loans)
- Advise on restructuring, divestment and investment, with consideration for greenhouse gas scope of consolidation
- Advise on the overall modelling framework to integrate climate change-related factors into the trader’s scenario analysis
- Advise on book structure and definition of organisational structure across front, middle and back offices
- Support management in defining roles and responsibilities across the business
- Enhance governance structure and organisational design
- Develop fraud risk assessment and response framework
- Co-sourcing model with management to support internal controls review with subject matter expert expertise
- Support management in interpretation and application of accounting standards (such as IFRS and SFRS)
- Provide advice on complex treasury and commodity transactions, including advice on associated disclosure requirements
- Develop of strategic and operational response to ensure compliance with local regulatory changes
- Advise management on internal and external reporting requirements (e.g. new OTC reporting requirements under the Securities and Futures Act)
Learn more about our accounting and reporting advisory offerings
- Implement and integrate Commodity/Energy Trading and Risk Management (C/ETRM) systemacross treasury and commodity risk activities and geographies
- Develop business process blueprint and perform gap analysis with ‘as-is’ processes
- Support the creation of use cases in business contexts
- Support management in user requirements articulation and system selection
- Prepare request for information (RFI)/request for proposal (RFP)
- Advise on technology strategy and solution design
- Improve and integrate controls framework within the system
- Support quality assurance, change management monitoring and benefits tracking
- Support the enhancement of technology functionality, such as treasury management systems (TMS), payments, bank interfaces, finance systems and cash management / forecasting
- Support digital transformation and cloud adoption
- Support project management throughout your end-to-end transformation journey
How we can help
Our global practice comprises of more than 200 dedicated specialists with a wide range of commodity trading and risk management experience. We work with our network of specialists to serve our clients across the world, bringing global expertise whilst providing local partnership on the following areas.
With our extensive commodity market and trading technology experience, through working with leading commodity risk management and trading companies and C/ETRM system vendors, we can help with your business ideas from strategy development and operating model design through to successful implementation of processes and technology.
