![]() ![]() In addition to monitor their counterparties for Credit Risk – the ability of their clients to meet their financial obligations – CTCs are increasingly focusing on Reputational Risk as they cannot longer afford to do business with counterparties that are knowingly, or unknowingly, linked to sanctioned entities, been involved with money laundering, financial crime, et cetera.īeing associated with a heightened risk entity, either at individual or country level, will expose a CTC to the risk of regulatory censure. ![]() It is paramount for CTCs to have a clear line of sight on who their counterparties really are, in order to understand if they can do business with them. Historically, Commodity trading companies (CTCs) focused mainly on Financial Risk, but the market has now generally recognized that these five components are highly interconnected and that it is important to strive for a holistic view of risk across the whole organization. Risk management is about managing the uncertainty in business: this uncertainty can be broken down into five main components of Customer and Third Party Risk, Compliance Risk, Enterprise Risk, Financial Risk, and Corporate Governance and Controls. Managing risk has never been so complex and regulated in the commodities market: acting as telltales of the increased regulatory scrutiny and lower returns, some of the major banks have either withdrawn or significantly downsized their activities. With only few commodities presenting positive returns year to date, and with a growing regulatory outlook, the pressure and the pace of change in the commodities market has never been so exceptional. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |